Performance Fees: how portfolio managers earn their money
– or is there more to it?
Aligning portfolio management and investor interests with fair
reward is what most people associate with performance fees.
However, this perception neglects the other major ways that
performance fees can impact your business.
As indicated in our previous blog post ("Performance
fees for the Fund industry: it's decision time"),
EU-wide, non-harmonized requirements on performance fees do not
only lead to unequal investor protection, but could also cause
sizeable market uncertainties regarding the EU passporting system.
There is recent evidence that different local European authorities
are imposing inconsistent requirements on performance fee
calculation and disclosure rules. This has caused some confusion
about whether complying with these requirements is an additional
condition of marketing a fund in a foreign country, on top of the
EU passport.
