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Record-breaking Miton restructures fund manager bonuses

Miton has restructured the way it rewards fund managers for strong performance as it celebrates a record £1 billion annual inflow.

Record-breaking Miton restructures fund manager bonuses

Miton has restructured the way it rewards fund managers for strong performance as it celebrates a record-breaking year for inflows. 

According to its annual update, the firm posted a record £1.019 billion inflow in 2018, a 106% jump on the £494 million inflow it posted in 2017. 

This fuelled a 14% rise in assets under management from £3.8 billion to £4.4 billion. 

Adjusted pretax profit rose 34% to £9.2 million, with the dividend payout 43% higher a 2p. 

Miton highlighted several factors behind its impressive year. This included the fact that 81% of its funds have delivered first or second quartile performance since their launch, or under their current fund managers. 

Within this the equity fund range grew by 27% to end the year just above £3.1 billion, with strong demand for its LF Miton UK Multi Cap Income fund recording a 25% jump in assets under management to £1.27 billion. The fund saw an inflow of £400 million in 2018. 

It also noted that its LF Miton European Opportunities fund and LF Miton US Smaller Companies fund also gained strong traction from investors. 

Miton chief executive David Barron (pictured) said: 'We have continued to broaden the business as evidenced by the strong growth in our newer funds.

'We are confident that we can maintain our longer-term momentum, despite the subdued markets in the short term.'

He added: 'Overall, the strength of our strategies, the effectiveness of our distribution and our scalable platform, supported by our robust financial foundations, give us confidence in Miton's future.' 

Changes to fund manager bonuses 

In September, the firm's Growth Share Plan, through which equity was issued to participants where funds had achieved growth and profitability, came to a close. 

Miton used the cessation of the scheme as an opportunity to introduce a structural change, which will now see fund managers rewarded via a revenue-based structure. 

'This will result in greater clarity of earnings and no future shareholder dilution,' Miton said. 

'From 1 October 2018, all fund manager remuneration is recognised in personnel costs rather than through the issuance of shares, shareholder dilution and share-based payment.' 

Over the past three years Miton has issued 22.369 million new shares and allocated 3.668 million shares to reflect the success of the underlying strategies run by the fund managers. 

In 2018 fixed pay costs rose by 3% to £6.9 million, while variable compensation, which includes discretionary bonuses and rewards to fund managers and related national insurance costs, increased by 71% to £5.8 million.

Miton estimated the restructure of its rewards system will add around £1.8 million to expenses going forward. 




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