Performance Fees: The Good, the Bad, and the (Occasionally) Ugly

摘要

Performance-based fees are becoming more common in institutional asset management, although much of the asset management community resists this trend. Performance-based fees are neither definitively better nor worse than conventional asset-based fees, and they do not systematically favor the manager or client. Depending on structure, they can be a fair and useful tool to align the interests of a manager with those of the clients, a way for clients to cut their overall fee burden, or a way for an investment manager to expropriate large chunks of client wealth. They can create dangerous revenue volatility for the investment manager—or can be a sensible way to manage an investment firm. Performance-based fees are an interesting blend of fixed fee plus an option.