The basic rationale for performance fees is that they align the interests of fund managers and their investors, and are an incentive for fund managers to generate positive returns. A "2 and 20" annual fee structure - a management fee of 2% of the fund's net asset value and a performance fee of 20% of the fund's profits - has become standard practice among hedge funds. Critics of performance fees, including Warren Buffett, opine that the skewed structure of performance fees - where managers share in the funds' profits but not in their losses - only tempts fund managers to take inordinate risks to generate high returns.
Investment dictionary. Academic. 2012.
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Performance fee — A performance fee is a fee that an investment fund may be charged by the investment manager that manages its assets, calculated by reference to the increase in the fund s net asset value (or NAV ), which represents the value of the fund s… … Wikipedia
performance fee — sėkmės mokestis statusas Aprobuotas sritis kolektyvinio investavimo subjektų veikla apibrėžtis Kintamas investicijų valdymo išlaidų dydis, priklausantis nuo valdomo investicinių priemonių portfelio vertės prieaugio. atitikmenys: angl. performance … Lithuanian dictionary (lietuvių žodynas)
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fee — n [Middle English, fief, from Old French fé fief, ultimately from a Germanic word akin to Old High German fehu cattle] 1: an inheritable freehold estate in real property; esp: fee simple compare leasehold; life estate at estate … Law dictionary
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fee — A charge fixed by law for services of public officers or for use of a privilege under control of government. Fort Smith Gas Co. v. Wiseman, 189 Ark. 675, 74 S.W.2d 789, 790. A recompense for an official or professional service or a charge or… … Black's law dictionary
Fee Structure — A chart or list showing the dollar amounts that a business charges for various services or activities. A fee structure lets customers or clients know what to expect when working with a particular business. Potential customers should always… … Investment dictionary
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performance for profit — The exclusive right of the proprietor of a copyright of a musical composition or his assignee. 18 Am J2d Copyr § 24. A performance for profit may exist, even though no admission fee is charged or no profit actually made. The performance of a… … Ballentine's law dictionary
incentive fee — Compensation paid to commodities ( commodity) trading advisers or to any practitioner who achieves above average returns. Sometimes called performance fee. Bloomberg Financial Dictionary * * * incentive fee incentive fee ➔ fee * * * incentive fee … Financial and business terms