Performance fees fail to generate better returns in closed-end world

Investment trusts carrying performance fees have failed to generate superior returns to those withou...

Investment trusts carrying performance fees have failed to generate superior returns to those without, research by Grant Thornton has revealed. The group analysed 240 trusts over five years from 2003 to 2007 and found vehicles without such fees actually outperformed more regularly on average. Over 45% of trusts currently charge performance fees, which reward the manager for either increasing the net asset value or beating the benchmark. Grant Thornton's research revealed vehicles with performance fees beat their benchmark 53% of the time compared to 59% for those without them. Consu...