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

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  • Robert D. Arnott

Abstract

The topic of performance-based fees is one of the many governance issues that arise in the management of investment assets, the investment process, and the investment enterprise. Performance-based fees are not inherently better or worse than asset-based fees—for sponsor or manager. Performance fees 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. This column explores the subtleties of this fascinating element of the investment business.

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  • Robert D. Arnott, 2005. "Performance Fees: The Good, the Bad, and the (Occasionally) Ugly," Financial Analysts Journal, Taylor & Francis Journals, vol. 61(4), pages 10-13, July.
    • Handle: RePEc:taf:ufajxx:v:61:y:2005:i:4:p:10-13
    DOI: 10.2469/faj.v61.n4.2736
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