Re:Titan launches its mobile ‘not a hedge fund’
by pmart123 on Tuesday August 21, 2018 @05:31PM
(#17814020)
One newer fee structure to emerge on the endowment side is the 1-or-30 structure, which tries to incentivize managers when they outperform, but also allows managers to keep the lights in an underperforming period.
On the retail side, I'm sure using incentive fees is compelling to some potential clients. However, from a compliance perspective, offering a performance-based fee is thought to be operationally difficult. Incentive fee structures with high watermarks or hurdles are not trivial to calculate or grasp. As recently as the 80's, I believe incentive fee structures were outright illegal to offer to non-qualified investors. This is why fees typically are a percentage of assets.
https://www.institutionalinvestor.com/article/b1505qmcspbw8p...
On the retail side, I'm sure using incentive fees is compelling to some potential clients. However, from a compliance perspective, offering a performance-based fee is thought to be operationally difficult. Incentive fee structures with high watermarks or hurdles are not trivial to calculate or grasp. As recently as the 80's, I believe incentive fee structures were outright illegal to offer to non-qualified investors. This is why fees typically are a percentage of assets.