Transcend offers performance-based fee structure

By Andrew Rickard | May 06 2016 09:52AM

Provisus Wealth Management has created a new company, Transcend Direct, which will charge clients fees according to the investment returns they earn. Transcend charges 20% on any amount that a portfolio beats its benchmark.

Provisus announced the launch of Transcend Direct on May 3 and says its subsidiary will make money when client portfolios outperform industry benchmarks. The company suggests the platform will appeal to investors who want more fee transparency. Besides portfolio construction, management, and monitoring, Transcend offers goal-based financial planning, account aggregation, as well as a personalized investment policy. Clients are able access their accounts online at any time.

Family of funds

Clients pay a fee of 0.25% to cover the base cost of administering a family of funds. "When these funds do not perform better than the market as measured against their industry benchmark, clients will pay fees similar to traditional ETFs," says Transcend. "When these funds outperform, a performance fee is charged that is equal to 20% of the performance of the fund above its industry benchmark. This directly ties the investment manager's remuneration to the value added results achieved by the clients."

To open an account at Transcend there is a minimum equity portfolio size of $50,000, but this number may be reached by combining two accounts (e.g., an RRSP of $40,000 and a TFSA of $10,000). There are no trading costs, custodial charges, or annual fees.

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