Page 38 - April Report2022

April Report 2022
Investment/Finance Committee meeting minutes (7)
Table 6 Investment Fees
Public Equities
Public
ETFs
Flexible Managers
Private Capital
Fixed Income & Cash
Other
Prime Buckholz
US Bank
AUM (thous)
$115,809
$40,520
$29,340
$68,001
$33,049
$839
-
-
$287,565
Base Fees (thous)
$876
$18
$391
$955
$20
$1
$281
$65
$2,628
%
0.76%
0.04%
1.33%
1.40%
0.06%
-
0.10%
0.02%
0.91%
Total
It should be noted the above analysis only describes base investment manager fees paid, which generally is a fixed ratio of the market value of funds managed. It does not include performance fees or carry fees, which vary materially between managers and which may or may not be subject to a hurdle rate. Many flexible (i.e. hedge) fund managers and Private Capital managers charge a carry fee equal to 20% of the profit allocation. Most are subject to a high-water mark calculation. Needless to say, it is extremely difficult to calculate the carry fees paid to managers. In general, in bull market years like 2020 and 2021, carry fees can be very material and exceed base investment fees. For example, if Private Capital managers earn an excess net return of 25% in a year with no hurdle rate their carry fee could be 20% of 25% or 5.00% on top of the base fee of 1.40%. On the other hand, in bear market years carry fees could be zero.
Malcolm would like Prime to estimate total investment fees paid in 2020 (i.e. base plus carry) but agreed a detailed analysis would be too time consuming. Prime agreed to attempt to provide a ballpark estimate.
11. JSF Foreign Currency Exchange – At the November 18, 2021 meeting the Committee (i.e. Hugh) questioned the Prime statement in the JSF 2020 financial report footnote that said 48% of JSF
total assets are subject to foreign currency risk. The Committee thinks that ratio is too high. Prime provided a worksheet for this calculation but the Committee would like to discuss the matter at our June 20, 2022 meeting.
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