Greencoat UK Wind (UKW ) has won praise for negotiating a change to the annual management fee it pays fund manager Schroders Greencoat that will save shareholders an estimated 19%.

From 1 January Schroders Greencoat will apply its tiered annual fee to the lower of market capitalisation or net asset value, rather than just NAV, which analysts said was a shareholder friendly move given the £2.8bn investment company trades at a 21% discount to its £3.6bn net asset value.

While the thresholds for the fee remain unchanged – at 1.2% up to £500m, 1% between £500m and £1bn, 0.8% between £1bn and £3bn, and 0.7% above £3bn – taking them off the company’s depressed market value rather than asset value yields a 19% cut in fees, equal to £5.5m a year, said Deutsche Numis analyst Colette Ord.

Ord said the move should ‘further enhance the implied returns from Greencoat UK Wind portfolio, which we calculate to be 12.6% at the current share price, one of the highest in the sector’.

Chair Lucinda Riches said: ‘Following constructive discussions with the investment manager, we are pleased to be able to announce this revised fee structure which will foster even stronger alignment with shareholders.’

Investec analyst Alan Brierley said it was a ‘very positive development’ and represented ‘very low-cost access to a well-managed, diversified portfolio of renewable assets’.

‘Given greater macroeconomic volatility in recent times, we believe that NAV is perceived as less absolute fact and more just a subjective reference and therefore investors have clearly been questioning the use of NAV in structuring ad valorem management fees,’ said Brierley.

‘While NAV may be an assessment of the value of the assets of a company, the value of the company itself is always determined by the market capitalisation,’ he added.

Ord believed ‘more companies will come under pressure to align fees with share price performance’ given the prevalence of discounts in the renewables infrastructure sector where shares on average trade 25% below NAV.

Greencoat UK Wind is not the first renewables fund to adopt this approach. Since launch three years ago Harmony Energy Income Trust (HEIT) has always paid its 1.2% fee to Harmony Energy Advisers at the lower of market capitalisation or NAV, a boon to investors given the shares trail at a 32% discount having started to derate in April last year.

While unusual among ‘alternative’ asset funds, the adoption of market value or NAV based fees is more widespread among equity funds where it is applied by Odyssean (OIT ), AVI Japan Opportunity (AJOT ), Abrdn Asian Income Fund (AAIF ) and Polar Capital Global Healthcare (PCGH ).