Macquarie reaps fund fee windfall

Macquarie Bank said it would earn performance fees from its specialised funds management businesses of $168 million for the six months to June 2005. These fees take the fee income from the bank’s numerous listed funds to $413 million for the year to June. The performance fees are tied to the relative share price appreciation of the funds relative to benchmark stock indices, and are not directly related to the actual earnings or operations of any of the funds or the businesses within those funds. Net of taxes and bonuses, only about a third of the $168 million for the June half year will flow down to the bank's bottom line. Macquarie does not earn much cash income from most of the performance fees, but receives the fees in the form of additional units in most of the listed trusts.