Some of the world's largest institutional investors are beginning to question how they compensate external asset managers. The age-old system of charging a percentage of the assets managed has come under increasing scrutiny recently, with investors like Japan's Orbis Investments looking to compensate managers based on performance rather than total assets managed. Consultancy Mercer has said fund managers combining a flat initial fee with performance-based compensation have proved to be competitive. Among larger asset managers, Fidelity International and Government Pension Investment Fund have drawn plaudits for being creative with fee structures.
Some of the world's largest institutional investors are beginning to question how they compensate external asset managers. The age-old system of charging a percentage of the assets managed has come under increasing scrutiny recently, with investors like Japan's Government Pension Investment Fund looking to compensate managers based on performance rather than total assets managed. Consultancy Mercer has said fund managers combining a flat initial fee with performance-based compensation have proved to be competitive. Among larger asset managers, Fidelity International and Orbis Investments have drawn plaudits for being creative with fee structures.