What do you know about management fees and performance fees?

Question

Accepted Answer

Management fees and performance fees are charges levied by investment managers for managing funds and achieving certain performance benchmarks.

Management fees are ongoing charges that cover the cost of managing the fund, including administrative expenses, research, and investment management.
Performance fees are additional charges based on the fund's performance relative to a benchmark or a predetermined hurdle rate.
Management fees are typically calculated as a percentage of the fund's assets under management, while performance fees are often a percentage of the fund's profits.
Management fees are usually charged annually or quarterly, while performance fees are typically assessed on a periodic basis, such as annually or at the end of a specific investment period.
Management fees are paid regardless of the fund's performance, while performance fees are only charged if the fund achieves certain performance targets.
For example, a fund may have a management fee of 1% per year and a performance fee of 20% of profits above a specified benchmark.
Management fees and performance fees can vary depending on the type of fund, investment strategy, and the level of assets under management.

Accepted Answer

A Management Fee is a fee charged by an Investment Manager or Financial Advisor for managing an Investment portfolio on behalf of clients. The fee is charged in the percentage of total assets under management (AUM).

A Performance Fee/Incentive Fee is a fee charged by an Investment Manager or Financial Advisor based on the performance of an investment Portfolio. Performance fee charged as a percentage of investment gains/Profits.

What do you know about management fees and performance fees?

Top State Street Corporation Fund Accountant interview questions & answers

Popular interview questions of Fund Accountant

Top HR questions asked in State Street Corporation Fund Accountant