Finding the incentive

Performance fees have traditionally been charged only by hedge funds and institutional funds, but increasingly more ‘plain vanilla' vehicles are as well. Investors need to understand charges as they affect returns

Retail fund investors may be surprised to learn they will increasingly be asked to stump up incentive fees for their asset managers. In the past, such fees were charged only on hedge funds or other institutional products. Now, however, incentive fees are being introduced into traditional ‘long-only’ structures, the real plain vanilla of the fund world, as well as on the more exotic absolute return or 130/30 vehicles. The management company’s factsheet may not disclose all the relevant information if investors want to understand how a fund charges its incentive fee. Investors can spot the...