Summary
TALKING about the economics of the fund management industry at the time of the merger between ISIS and Foreign Colonial, the former's chief executive Howard Carter remarked that when managing life funds that have closed for new business, it is normal to expect annual outflows of between 5% and 10% of the size of the fund.
However, the management fees derived from running closed funds are very low - ISIS should know as it has the contract for Royal SunAlliance's book of closed life business The effect on the fund manager's income therefore if the firm loses Pounds 200 million of life fund business equates to the revenue derived from winning just Pounds 10 million of new business managing a new venture capital trust.See the full content of this document
Extract
Venture That Must Play by Rules
Carter was making the point to let his shareholders know that they should not worry too much if they see life funds ebbing away, but his message has implications going beyond that. The ques...
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