7 October 2017

Zero Fund Management Fees?

Maybe at first sight it appears reasonable to wave any fund management fee if the performance does not match the agreed benchmark. And why not ask the fund manager to make a penalty payment as well? But to be serious, any business that agrees to a zero fee would not be viable in the long run. Better to agree fees to be calculated on a (three year?) rolling basis and set the fee in a narrow zone, for example basic 1% and a band of +/- 0.5% to adjust for over/under performance?