RAB Capital has revealed proposals to cut the fees on its flagship fund

Hedge fund manager RAB Capital today announced plans to slash the fees on its flagship Special Situations fund to stem a possible exodus of investors.

The moves come days after Philip Richards stepped down as chief executive of the RAB group amid concerns about the state of the fund, to which he is now devoted full time.

RAB is offering to cut its management and performance fees on the fund in return for investors agreeing to postpone the date at which they can pull out their cash by three years. Management fees will halve to 1% a year, while the performance fee will drop from 20% to 15%.

Philip Richards

Philip Richards has stepped down as chief executive of the RAB group

Special Situations has been hit by the fall in share prices of young mining companies and a writedown in the value of the A1 Grand Prix motor racing business. The fund has lost more than 40% this year.

Investors will vote on the moves on 29 September.

Richards said: "We are very disappointed with the performance of Special Situations in 2008 and regret the impact the performance will have on investors."

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