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Call for removal of restrictions on performance fees

Fund researcher Fitzrovia International is calling for restrictions on performance fees to be lifted as they no longer serve a practical service.

The plea follows the publication of a report analysing performance fees for over 1,500 open-ended funds globally, which concludes that while 57 per cent of the funds actually earned a performance fee, managers received a 180 per cent increase in fee revenues, in addition to their management charges.

Fitzrovia chief executive Paul Moulton says: “The vast majority of managers of funds with performance fees have a potentially substantial upside if they perform well, but do not suffer an equivalent downside for under-performance. It may be fairer to compensate investors by way of a reduced annual management charge.”

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