Manchester and London (MNL) has announced a change in the structure of the fees it pays to its manager, M&L Capital Management Limited, under which there is a new tiered management fee replacing the current fee arrangements, which took effect from 1 September 2024. The new fee arrangements do not include any performance fee or performance related elements.
Under the previous fee arrangements, MNL paid a base management fee of 0.5% per annum of the company’s Net Asset Value (NAV). It also paid what it called a variable fee that was equal to 0.25% of the NAV if its performance over the 36-month period to the calculation date was above that of the company’s benchmark. Similarly, if the performance of the company over the 36-month period to the calculation date was below that of the company’s benchmark, a downward adjustment of 0.25% of the NAV was also applied to the fee. The manager also received £59,000 per annum for risk management and valuation services in its capacity as Alternative Investment Fund Manager.
Under the new fee arrangements, MNL now has a tiered management fee as follows:
- 0.7 per cent per annum of the NAV up to and including £750m;
- 0.5 per cent per annum of the NAV between £750m and £1.5bn; and
- 0.3 per cent per annum of the NAV above £1.5bn.
As noted above, there is no variable or performance fee element to the new fee structure. There is no change to the Risk Management and Valuation fee, however, the fee will be adjusted annually in January by the UK Consumer Prices Index (CPI) with the first increase being in January 2026 on the basis of the January 2026 CPI (percentage change over 12 months) figure.
A simpler and more predictable fee structure
MNL’s board says that it believes the new fee structure offers a simpler and more predictable arrangement, removes the unnecessary volatility in ongoing charges for shareholders and allows the manager to better plan for the future and broaden the expertise of the management team supporting the company. It also addresses concerns raised by proxy advisors and compliance departments over the variability of the fee arrangements. In addition, the board believes that the changes have the potential to generate cost savings for shareholders in both the short and long-term, in particular, if the company were to see a material increase in NAV.
