Othania Invest is willing to pay the price of lower income to introduce set prices.
The small, relatively new asset manager is launching a new fund, Othania Bæredygtig, where all investors will pay a set fee of EUR 538 (DKK 4,000) a year.
This sets the fund apart from almost all others, where clients pay a fee relative to their investment size.
"The idea emerged because so many people struggle to understand the cost structure at other managers, and people wonder how much the manager is really earning. Here, it is completely transparent," says Christian Mørup-Larsen, executive and founder at Othania.
The annual percentage rate of charge (APRC) will be lower the bigger the fund gets. The current rate is 0.58 percent, and Danish investment funds with a medium risk have an average APRC of 1.42 percent.
Othania has two existing funds, where clients pay fees relative to investment size. The company, which has AUM totaling EUR 66m (DKK 490m), was founded in 2016 with a EUR 300,000 (DKK 2.2m) balance pooled from the private savings of the founders and their family and friends.
The goal is to manage EUR 130m (DKK 1 billion) by the end of 2022, and this is realistic, Mørup-Larsen emphasizes.
"Things happened slowly over the first three years, but have really picked up over the past two," he says.
Lots of investors use Morningstar, so getting the top grade was important to us
It is no coincidence that exactly three years went by before Othania acheived its breakthrough. This is the track record Morningstar requires before rating a department, and in this case, they rated Othania five stars, the highest possible rating.
"Lots of investors use Morningstar, so getting the top grade was important to us," explains Mørup-Larsen.
The first fund, Orthania Invest, was recently ranked first out of 137 funds by Morningstar and has had returns of over 67 percent for five years. No other equity and bond fund accessible to Danish investors has generated such high returns over a five-year period.
Mørup-Larsen and his brother, Vincent Dilling-Larsen, founded Orthania. The company has 700 clients investing between EUR 130 (DKK 1,000) and EUR 2.6m (DKK 20m), reports Mørup-Larsen.
The investment philosophy is model-based and systematic. It analyzes the potential equity market risk for the next month, and based on this, either invests 100 percent in equity or 100 percent in bonds.
English edit: Catherine Brett