Unlisted fund fees a performance hard to repeat

Macquarie Group is milking fees, and especially performance fees, from its unlisted trusts, though the level and rate of increase in those fees seems inconsistent with trends in asset values in the equity market.

The investment bank has focussed on unlisted funds marketed to a select investor base in recent years. The fee arrangement on each of the unlisted funds isn't transparent, but follows the same principles as in private equity, according to management.

The group's financial statements for the year to March 2008 show unlisted funds under management increased 25 per cent over 12 months to $25 billion.

Listed funds under management fell 22 per cent to $2 billion.

Base fees earned by the group for managing unlisted funds increased 22 per cent to $958 million. Performance fees from unlisted funds increased more than 400 per cent to $386 million.

Base fees from listed funds increased nine per cent to $205 million. Performance fees from listed funds increased 160 per cent to $78 million, of which the bank earned only $3 million in the second half of its financial year.