The value of investments can fall as well as rise, and you may get back less than you invested. Past performance is no guarantee of future results.

Performance fees definition

Investment and hedge fund managers will often charge performance fees for generating positive returns on investments. The fee is a percentage of any profits or outperformance generated, typically between 10% and 20%.

Performance fees definition

Investment and hedge fund managers will often charge performance fees for generating positive returns on investments. The fee is a percentage of any profits or outperformance generated, typically between 10% and 20%.

Performance fees are controversial. Supporters argue they act as an incentive for fund managers to seek the best possible returns, while detractors argue they mean managers share in the fund’s profits, but not in any losses, and are incentivised to take on too much risk. There’s a push from UK regulators to make fees more transparent.

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