Retail investors have been warned by industry experts that performance-based fund fees rarely lead to reduced costs. Mark Dampier, of Hargreaves Lansdown, said nearly all performance fees are in the interests of fund managers rather than investors. John Husselbee, of Allianz Global Investors, said it would be difficult for investors to calculate the value of performance-based cost structures. Active fund managers have started adopting performance-based fees with lower rates when the fund under-performs its benchmark. The move is in response to growing competition from cheaper, passive funds.
Retail investors have been warned by industry experts that performance-based fund fees rarely lead to reduced costs. Mark Dampier, of Hargreaves Lansdown, said nearly all performance fees are in the interests of fund managers rather than investors. John Husselbee, of LionTrust, said it would be difficult for investors to calculate the value of performance-based cost structures. Active fund managers have started adopting performance-based fees with lower rates when the fund under-performs its benchmark. The move is in response to growing competition from cheaper, passive funds.