Fund incentive fees: Aligning interests

One side of the debate around fund incentive fees is that fixed, asset-based management fees encourage asset-gathering, whereas a performance-based fee promotes efforts into research and analysis to achieve a performance target. Wherever your opinion may lie on this, a key point of debate around performance-based fees charged by fund managers is whether they align investors' and manager interests, or in fact create a conflict of interest. Conceptually, the manager should earn - or not earn - an incentive fee, depending on whether or not alpha is generated for investors. Which FTSE ...