Metrics to cut performance fee to counter low rate environment
Metrics Credit Partners (Metrics) has announced plans to voluntarily waive its performance fee for the MCP Income Opportunities Trust (ASX:MOT), to prevent investor returns being impacted by current record low interest rates.
The trust’s current performance fee terms are based on achieving the Reserve Bank of Australia (RBA) cash rate plus 6% per annum. At the time of the trust’s launch this was equal to 7.5% per annum but given the subsequent drop in the RBA cash rate, the performance fee now applies once returns hit 6.75%.
Metrics Managing Partner, Andrew Lockhart said the group would increase the trust performance fee hurdle back to the original 7.5%, helping to cut costs for investors.
“Since the initial launch of MOT, we have seen the Reserve Bank of Australia decrease the cash rate by 75 basis points to 0.75%,” he said.
“As a result of these rate cuts, Metrics is entitled to a performance fee this year. We have therefore elected to waive this fee to ensure investors keep more of the trust’s outperformance in their back pocket and restores the position for investors to what was originally intended when MOT was first listed on the ASX.”
MOT offers investors exposure to a range of borrowers and private credit instruments that are typically not available to retail investors. The trust listed on the ASX in April 2019 and recently changed its income distributions from quarterly to monthly.
Since inception, the MCP Income Opportunities Trust has delivered 7.22%, exceeding the target return of 7% a year.
“Metrics is about seeking to consistently deliver for all investors. We believe the decision to waive the performance fee for MOT, coupled with the recent change to monthly distributions, will make the trust an even more attractive proposition for investors seeking income in the current low-rate environment,” Mr Lockhart said.
ASX ANNOUNCEMENT – 21 January 2020