Room 101: Performance fees - heads I win...???

15/01/2025 8 min
Room 101: Performance fees - heads I win...???

Listen "Room 101: Performance fees - heads I win...???"

Episode Synopsis

Send us a textJoe doesnโ€™t like performance fees - but why? Are they innately problematic or just badly and perhaps cynically implemented in the mutual fund industry? In this bitesize episode, we get into alignment of interests, bad design and investor behaviour.๐—ง๐—ต๐—ฒ ๐—บ๐—ผ๐˜€๐˜ ๐—ถ๐—ป๐˜๐—ฒ๐—ฟ๐—ฒ๐˜€๐˜๐—ถ๐—ป๐—ด ๐—ฝ๐—ฎ๐—ฟ๐˜ ๐—ผ๐—ณ ๐˜๐—ต๐—ฒ ๐—ฐ๐—ต๐—ฎ๐˜?Performance fees are most often discussed in the context of alignment and risk sharing. Joe raises an interesting question - can they also be used to nudge investors away from unhelpful behaviour?