Investment Managers performance bonus

Geriatric

I have a holding in a large investemnt trust where the managers get a performance related fee if they better a laid down yardstick.
If they under perform they do not suffer any deduction. This one sided arrangement seems to cut across present bonus thinking. Should this be a matter for the FSA to consider?
Some investment trust mangaers have a rolling system where the bonuses are carried forward and negative years are charged. Should this not be the system for all such arrangements?

RayWolfe

Lots of investment managers do the same. I understand the practice is growing. It stinks. I refuse to invest in any UT or IT that does it. Vote with your feet.

purch

Vote with your feet

Yes.

Coming to a (hopefully) informed decision to Invest in a particular Fund or Trust, and then complaining about the AMC afterwards is pointless.

If you don't agree with the system, don't invest in the product.

FATHEROFTWO_2

I have 2 funds with a performance related bonus if they exceed expectations or "high water mark" as they call it Im delighted .
It gives the managers an incentive to put the extra effort in to achieve there bonus.

To be honest I am more than happy to pay it .
I think it 20 percent on top which means I get to keep the extra 80 percent performance.....simples

Geriatric

FATHEROFTWO wrote: »

I have 2 funds with a performance related bonus if they exceed expectations or "high water mark" as they call it Im delighted .
It gives the managers an incentive to put the extra effort in to achieve there bonus.

To be honest I am more than happy to pay it .
I think it 20 percent on top which means I get to keep the extra 80 percent performance.....simples

We know MPs and bankers are dishonest. If the fund managers know that they are having a bad year why not make it a worse year. After all it costs them nothing and leads to a bigger bonus next year should things pick up.

FATHEROFTWO_2

If they underperform the market then less people will join the fund and more people are likely to take there business elswhere

Geriatric

purch wrote: »

Yes.

Coming to a (hopefully) informed decision to Invest in a particular Fund or Trust, and then complaining about the AMC afterwards is pointless.

If you don't agree with the system, don't invest in the product.

If you do not agree with the system get it changed!
Banker's bonuses are under the microscope and fund managers on a heads I win tails I do not lose bonus should be similarly sorted out.

Geriatric

purch wrote: »

Yes.

Coming to a (hopefully) informed decision to Invest in a particular Fund or Trust, and then complaining about the AMC afterwards is pointless.

If you don't agree with the system, don't invest in the product.

No get the system changed! Bankers bonuses are under review and similarly invetment mangers on a heads I win tails I do not lose agreement should come under the same scrutiny by the FSA

purch

If you do not agree with the system get it changed!

It's not a system.

It's a product, that you chose to purchase.

If you don't like the way the Fund Manager is renumerated, don't buy the Fund.

Moaning about it after the fact, does you no favours.

Yes, it's a stupid and unfair way to renumerate the Manager, which is why you would be stupid to go along with it by buying the product.

No one makes you.

FATHEROFTWO_2

As long as the fund manager is outperforming the top of the market not just the average then I am happy to pay 20 percent over and above the ordinary rate.

If you dont like the fund then there are plenty other underperforming funds that will gladly take your business but you wont make as much money

Its a no brainer

Geriatric

purch wrote: »

It's not a system.

It's a product, that you chose to purchase.

If you don't like the way the Fund Manager is renumerated, don't buy the Fund.

Moaning about it after the fact, does you no favours.

Yes, it's a stupid and unfair way to renumerate the Manager, which is why you would be stupid to go along with it by buying the product.

No one makes you.

Read the original posting . I was talking about the system. It was you who raised the question of a product.
Charm will get you everywhere!