Our Fees

The Fund incurs fees and expenses which will impact the value of your investment. These fees are included in your unit price. The fees which are calculated and paid out of the assets of the Fund are:

Investment Management Fees

Orbis earns a fee for managing the investments of the Fund. There is a fixed fee component and a performance fee component.

Fixed Fee 1% (per annum)
Performance Fee (with refund mechanism) 25% (on the performance amount)

The performance fee component includes a unique mechanism where performance fees are stored in the Fund instead of being paid directly to Orbis. These reserved performance fees can be refunded to the Retail Class at times when the Fund is not doing as well as the benchmark. The unique refund mechanism means the management fee amount in any one year can either be an expense which reduces the value of your investment, or an expense refund which increases the value of your investment.

Fund Administration Expenses

Expenses for administering the Fund are also paid out of the Fund’s assets. These are the usual expenses which are incurred in running a fund and include fees paid to the Fund’s responsible entity, as well as the independent fund administrator and custodian, and routine audit and legal fees. Fund expenses are shared by all investors in the Fund. The amount of Fund expenses which can be paid out of the net assets of the Fund is capped at 0.2% of the Fund’s net asset value.


Why do we have a refundable Performance Fee and how does it work?

We think it’s helpful to step through the mechanics of the fee structure to help you understand it. You may prefer to skip to our Scenarios table straight away if you’re in a hurry. Please remember you can always contact our client services team if you have more questions on our fees.

Why Do We Have A Refundable Performance Fee?

This ensures that our interests are aligned with yours as an investor in the Fund. As a firm we only succeed if we do well for you. In addition, having the reserve and refund mechanism means that we must do well for you over the long term—not just for a short period, otherwise we don’t get paid the performance fee. So whilst this seems a little complex, we believe it is worth the effort to apply this structure to get the best outcome for our clients.

A fixed fee of 1% per annum is charged on the assets of the Fund. This fee is deducted every day regardless of whether the Fund is going up or down.

A performance fee is charged when the Fund is doing better than the benchmark. In calculating the performance fee we measure the Fund performance after considering the fixed fee. 25% is charged on the amount by which this fund performance exceeds the benchmark. Unlike the typical performance fee, our performance fees are not immediately paid out of the Fund. Instead, our performance fees accumulate in a Reserve.

The performance fee reserve represents the total amount of performance fees which have accumulated but are not yet paid out of the Fund. The reserve is invested in the Fund and the value goes up or down with the return of the Fund. A portion of the reserve is paid to Orbis each day. The remaining portion of the reserve can be refunded to the Class at times when the benchmark is doing better than the Fund. If the benchmark continues to do better than the Fund, and we have emptied the reserve, the loss is tracked in the Reserve Recovery.

The reserve recovery represents the accumulated amount of performance which Orbis needs to recover before charging a performance fee again.

The fixed fee and a portion of the performance fee reserve is payable to Orbis. If there is a balance in the performance fee reserve, on a daily basis, Orbis is entitled to be paid the annual equivalent of:

  • 1/3 of the fee reserve balance, but
  • not more than 2.5% of the Class net asset value.

How Does This Work In Practice?

What performance fee is charged to the Fund and what performance fee is paid to Orbis in different scenarios.


 
Outperformance
We do better than the benchmark and returns are positive
Outperformance
We do better than the benchmark and returns are negative
Underperformance
We don’t do as well as the benchmark and there is money in the fee reserve
Underperformance
We don’t do as well as the benchmark and there is no money in the fee reserve
Net Asset Value $10,000 $10,000 $10,000 $10,000
Fund Performance net of fixed fee and expenses 6% = $600 -6% = - $600 3% = $300 3% = $300
Benchmark Performance 4% = $400 -8% = - $800 5% = $500 5% = $500
Did the Fund do better than the benchmark? Yes, the Fund added 2% or $200 more than the benchmark. Yes, the Fund lost 2% or $200 less than the benchmark. No, the Fund added 2% or $200 less than the benchmark. No, the Fund added 2% or $200 less than the benchmark.
What is the performance fee expense or expense refund that impacts the Fund? A performance fee of $50 is charged to the Fund.

(25% of $200)
A performance fee of $50 is charged to the Fund.

(25% of $200)
A performance fee refund of $50 is due to the Fund.

(25% of $200)
There is no impact to the Fund. A refund of $50 is due but there is no money in the fee reserve.
What does this mean for the Performance fee reserve or the Reserve Recovery? The fee reserve balance increases by $50. The fee reserve balance increases by $50. The fee reserve balance decreases by $50. The loss amount is tracked. No performance fees can be charged until the loss is recovered.

And then, an amount is payable to Orbis each day...

What amount is paid to Orbis? $0.05 is payable to Orbis for today, assuming the fee reserve was empty previously.

(1/3 of $50 p.a. for one day)

This reduces the balance to $49.95
$0.05 is payable to Orbis for today, assuming the fee reserve was empty previously.

(1/3 of $50 p.a. for one day)

This reduces the balance to $49.95
If the fee reserve still has a balance after the refund, a portion is payable to Orbis.

(1/3 of the remaining balance p.a. for one day)

The payment reduces the remaining balance.
No amount is payable to Orbis as the fee reserve is empty.
Comments You will notice that in these scenarios, the fee amount is the same. This is because the Fund did better than the benchmark, even though the Fund lost money in Scenario 2 In these scenarios, the Fund didn’t do as well as the benchmark. In Scenario 3 there is money that can be refunded, which actually increases the net asset value of the class. In Scenario 4 there is no money in the fee reserve and so there is no impact on the Fund, neither an expense nor an expense refund.

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