Bonham Carter: Performance fees can ramp up fund risk

Fund groups should be wary of using performance fees within their products to incentivise managers, Jupiter's vice chairman has warned.

Edward Bonham Carter told an audience at Investment Week’s Fund Management Summit that creating a culture where managers focus on the long term is vital, with performance fees on funds potentially clouding this goal. He said performance fees can work in some situations, but added they can also promote short-termism: “The devil is in the detail in terms of how you structure performance fees. You need to judge what are acceptable risk levels.” Jupiter manages more than £30bn, of which Bonham Carter said £3bn-£4bn is held in funds charging performance fees. He said the danger for grou...