New report argues case for performance-related fees
In a study of 2,110 funds worldwide that implement a performance fee structure, 40% of those achieved revenue above standard management fees.
For this 40%, the result was increased revenue by 57% over and above that arising from annual management fees.
The potential to increase revenues as a result of performance fees is clear, and now is the time to implement or review the structure, believes Fitzrovia.
Says Paul Moulton, chief executive at Fitzrovia: “While it may be difficult in the current market conditions for fund managers to consider or review performance fees, now really is the time when these fess are most justifiable and relevant before markets bounce back.”
“In the current market environment, fund managers can justify performance fees to investors more easily, and will be in time to take advantage of the potential to maximise revenues,” adds Ed Moisson, spokesman.
Fitzrovia has issued a report advising fund companies to re-assess their performance fee structure, compiling a check-list to encourage them to benchmark their fee structure.