Performance fees a waste of time - study

Analysis of 240 firms’ results between 2003 and 2007 by Grant Thornton found that, on average, funds without performance fees performed slightly better than those with them. While performance fees in the sample beat their benchmarks 53% of the time, those without performance fees did so 59% of the time. Grant Thornton says over 45% of what it calls “mainstream” investment firms have some form of performance fee for managers exceeding a benchmark or improving the net asset value of the company. “Generally speaking, the introduction of performance fees does not in itself lead to an improve...