Managing investment costs and aligning interests

Article

Managing investment costs and aligning interests

A decade ago, Frontier Advisors released a set of Fee Principles that proposed alternative investment fee structures to better align the interests of those that manage money with those who provide money.

Executive Summary

One of the key elements was a focus on a combined flat dollar base fee with a performance fee to reward targeted performance outcomes. We were careful not to suggest a standardised approach to allow for the differences in asset classes and manager styles, and not to be too prescriptive in the performance based fee component to avoid the wrong kind of risk taking. We focussed more on the “pay for performance” elements, while suggesting asset owners and managers needed to agree a commercial relationship that was mutually beneficial.

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Performance magazine issue 32, May 2020

Performance is a triannual digest, dedicated to investment management professionals, which brings you the latest articles, news and market developments from Deloitte’s professionals and clients.

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