Tuesday, August 3, 2010

Investors need a better way to reward fund managers

All too often, fund managers collect spectacular fees from investors for doing nothing more than keeping up with the performance of broader equity markets, according to The Economist. A study proposes measuring managers' performance against an "inertia benchmark," comparing returns from a manager's portfolio with those of a manager who does nothing. "Clients would face a lot of opposition if they tried to restrict managers' fees," the magazine notes. "But after a decade of dismal returns it is time for them to act."
The Economist

Inertia benchmark - I love it.

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