Skin in the game: Managers aligning with shareholders

Ashoka India Equity

One of the perennial problems that investors in actively managed funds face is an asymmetry in how market downturns will affect them compared to the people managing their money.

Poor performance means you lose money as an investor. But a manager, even if they have a stake in their own fund, is still going to get paid at the end of the month. To be fair, you are unlikely to find any active managers that never have a spell where they perform badly. They do also need to be paid, just like anyone else providing a service that requires a certain level of expertise. Nonetheless, it can be jarring to know your loss does not necessarily have the same impact on them that it does on you. All is not lost though, as there are managers out there taking steps to try and be...