Prior to 1 July 2013 the Investment Manager, VCIM, received a management fee based on the net asset value of the Group, payable monthly in arrears, at an annual rate of 2.0% of the NAV. Under the Amended Investment Management Agreement effective as of 1 July 2013, the Investment Manager receives a fee at an annual rate of 1.5% of the NAV, payable monthly in arrears.
Prior to 1 July 2013 the Investment Manager was paid an incentive fee equal to 20% of the increase in the NAV of the Company over an 8% per annum hurdle rate, with a catch up. From 1 July 2013 the incentive fee was changed to be 15% of the increase in NAV per share over a hurdle rate of 8% per annum. A catch up is no longer applied. Furthermore, for the purposes of calculating incentive fees, the Group's net assets are segregated into a Direct Real Estate Portfolio and a Capital Markets Portfolio. A separate incentive fee is calculated for each portfolio so that for any balance sheet date it will be possible for an incentive fee to become payable in relation to one, both, or neither, portfolio depending upon the performance of each portfolio. However, the maximum incentive fee that can be paid out in any given year in respect to a portfolio is 1.5% of the NAV of the portfolio at the balance sheet date. Any incentive fees earned in excess of the cap may be paid out in subsequent years providing that certain performance targets are met.
Ongoing charges have been calculated in accordance with the Association of Investment Companies (“AIC”) recommended methodology dated May 2012. It is the ratio of annualised ongoing charges over the average undiluted net asset value during the year. Ongoing charges include: management fees, directors’ fees and expenses, recurring audit and tax services, custody and fund administration services, fund accounting services, secretarial services, registrars’ fees, public relations fees, insurance premiums, regulatory fees and similar charges.
VOF’s ongoing charges, including management and performance fees, in 2012 and 2013 was 2.13%.