Active mutual fund managers are getting desperate. Their latest gimmick to keep you in the fold is to offer “performance based” fees. Don’t fall for them.
Performance based fees
Investors are savvier these days. They recognize the importance of fees, placing pressure on high-fee actively managed funds.
While the details vary, the underlying premise of performance-based fees is similar. If the fund manager beats a designated benchmark, he (or she) gets higher compensation. If there’s underperformance, investors pay lower management fees.
In theory, it sounds good, but let’s take a closer look.
Read on at DanielSolin.com right here: Don’t Fall For Performance Based Fees