The managers of the Lindsell Train investment trust have waived half of the £5,323,404 performance fee due for the year to 31 March 2021, a change that will be reflected on the calculation of the company's next NAV.

According to the board, dropping the performance fees for that year to £2,661,702  was a "generous gesture" that comes amid changes to the way performance fees are to be calculated.

The investment trust has adopted the MSCI World Index in Sterling as its new benchmark, with effect from 1 April 2021. The board said it is a more appropriate benchmark given that the portfolio is heavily invested in equities, but that a new way of calculating the performance fee is required.

"Reflecting this change, the board believes that it is also the appropriate benchmark to use for the purpose of calculating the performance fee. 

"The board is satisfied that, on a historic analysis and based upon forward-looking projections prepared by LTL and considered by the board and its advisers, the performance fee payable by the company would have been (in respect of the historic analysis) and is generally expected to be (in respect of the projections) lower than if the performance fee were calculated by reference to the company's former index, although there is no guarantee that this will be the case," the board said.

Another amendment which lowers the performance fee hurdle by excluding dividends will see the fee "marginally increase", although this is "likely to be more than offset" by the downward fee pressure created by the change in benchmark.

"Whilst expected to have the effect of marginally increasing the level of performance fees payable by the company, the Board is satisfied that this change is fair for shareholders and in line with standard market practice, and that the effect on the level of fees is likely to be more than offset by the downward effect expected by the change in benchmark," it said.

A performance fee will now only be paid if the change over the performance period is both above the benchmark and is a positive figure. Relative performance will be carried forward in years where LTL is not eligible for a performance fee based on these two criteria.