Octopus Investments Fees Exceed £100 Million Amid Rising Losses

The management of Octopus Investments has garnered significant attention as it reported fees surpassing £100 million for the second consecutive year. Despite these earnings, the company’s Fern Trading division has recorded widening losses, increasing from £185 million to £420 million for the financial year ending June 2025.

Octopus Investments, which oversees Fern Trading, has amassed £103.6 million in management fees, slightly up from £103.1 million in the previous year. This brings the total management fees taken by Octopus since Fern’s inception in 2010 to approximately £900 million. These figures raise questions about the relationship between management fees and the financial performance of the underlying assets.

Fern Trading, composed of nearly 330 companies, predominantly operates in sectors such as renewable energy, broadband fibre, housebuilding, and lending. Despite these operations, the overall value of Fern has been affected, with net assets falling by 12 percent to £2.16 billion and net debt rising by 23 percent to £1.04 billion.

According to estimates, the present market value of Fern is about £3.47 billion. Octopus charges a management fee of 2.5 percent on the first £3 billion of business value, decreasing by 0.25 percentage points for every additional £500 million. This fee structure has elicited criticism from some independent financial advisers, who argue that it appears detached from the performance of the assets in question.

Operating losses have persisted within Fern’s broadband division, which includes brands such as AllPoints Fibre and the Vorboss enterprise network in London. A £125 million impairment charge has been attributed to this sector, a significant factor contributing to the £135 million loss experienced in the past financial year, following £142 million in losses previously.

Octopus Investments aims to provide investors in Fern with a long-term annual return of 3 percent while protecting them from inheritance tax, which stands at 40 percent for estates exceeding the nil-rate band currently set at £325,000. An additional residence nil-rate band of £175,000 increases the potential tax-free allowance per person to £500,000.

Management at Octopus maintains that the ongoing investments in new business areas, particularly within the fibre portfolio, are essential for long-term success. They assert that initial high operational expenditures, coupled with one-off impairments, have been the primary contributors to current losses.