Fidelity International is introducing a new fee model for active equity funds, which will apply to institutional investors globally, the firm said in a statement Tuesday.
The money manager will begin to implement variable management rates for contracts with existing clients beginning in January 2018 subject to regulatory approvals, a spokeswoman said. The current flat annual fee structure will be replaced with one linked to fund performance.
"These changes will more closely align the performance of our business with the performance of our clients' portfolios and deliver what we believe clients and regulators are looking for. Our fee structure will give back for underperformance of the benchmark, whereas others do not," said Brian Conroy, president of Fidelity International, in a news release.
Under this new arrangement, Fidelity International will share the upside with its investors as the new fees will be a range subject to a pre-agreed cap and floor. Clients who receive benchmark level performance or lower will pay reduced fees, Fidelity said.
Fidelity International has £233.4 billion ($312.5 billion) in assets under management, including $170 billion in active equity funds manged for clients in the U.K., continental Europe, Japan and the Asia-Pacific region, including Hong Kong and Australia.