AMP (ASX:AMP) share price struggles amid management fee cuts

This comes after the financial services giant recently confirmed the sale of AMP Capital GEFI.

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AMP Ltd (ASX: AMP) shares were struggling on Wednesday. The AMP share price did manage to spend some time in the green but finished the day flat at $1.12. By comparison, the S&P/ASX 200 Index (ASX: XJO) managed to eke out a small gain, closing the day 0.31% higher.

This came following reports AMP Capital will trim its management fees in its Community Infrastructure Fund (CommIF).

Let’s take a closer look at what’s been happening for the embattled financial services company lately.

What went down today?

AMP is currently unwinding AMP Capital’s assets and spinning off its infrastructure and property divisions.

Recently, it confirmed the sale of AMP Capital Global Equities and Fixed Income (GEFI) to Macquarie Group Ltd (ASX: MQG) on 8 July.

Today, AMP Capital stated to investors that its management fees will receive a haircut of up to 32%, according to reports from the Australian Financial Review.

Under the new schedule, from 1 August, management fees will drop to 80 basis points.

This number further reduces to 70 basis points if the fund surpasses $2 billion in assets.

AMP Capital also highlighted two new additions to its investment committee to beef up governance.

It seems investors weren’t quite sure how to take the news, judging by the performance of the AMP share price today.

The battle for AMP Capital continues

The moves come as the company is seeking to hold onto its CommIF fund, which currently has three separate takeover offers. Dexus Property Group (ASX: DXS), Morrison & Co and Palisade Investment Partners have all made separate bids.

These proposals effectively match the fee schedule set in an already proposed takeover that went south back in April.

In a letter to shareholders on Tuesday, AMP co-head of infrastructure Michael Bessel said:

We have reviewed the existing management and service arrangements for CommIF and determined to offer a compelling proposal which includes reduced fees and enhanced governance of the fund.

The saga for AMP Capital continues and there will likely be further events unfolding in the days and weeks to come.

AMP share price snapshot

The AMP share price has had a choppy year to date, having slipped 28% into the red. This extends the previous 12 months’ loss of more than 36%.

These returns have significantly lagged the ASX 200’s returns of around 10% this year to date.

At the time of writing, AMP has a market capitalisation of around $3.7 billion.

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The author Zach Bristow has no positions in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Macquarie Group Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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