incentive fee
Definition
Fee paid as an incentive to the general partner of a hedge fund or, less frequently, the manager of a mutual fund, the amount of which depends on his/her performance, usually relative to some benchmark index. Such a form of compensation could in fact extend to any financial professional, but tends to be most common among people directly responsible for managing funds. Since managers are compensated based on actual results, they will try to get the best results for their clients, but the argument is sometimes made that an incentive fee might encourage the manager to take more risks than he/she otherwise would in pursuit of maximum returns. also called incentive fee.
 Cite this definition
Related Terms
performance-based compensation
'incentive fee
' appears in the definitions of these terms on BusinessDictionary.com
cost plus incentive fee (CPIF) contract
Related Articles from the InvestorGuide.com University
Prospectuses, Annual Reports, and Other Documents
In order to evaluate a mutual fund, you should read its prospectus and annual report, which describe the fund's investment objective, strategy, fees and expenses, past performance, risks, and largest holdings. Click here to learn more about each of these topics.
Basic Mutual Fund Concepts
Describes some of the terminology necessary to understand mutual fund investments, including open-end, closed-end, net asset value, public offering price, dividends and capital gains distributions, family, share classes, and dual-purpose fund.
Stock Mutual Funds
Stock funds, also known as equity funds, can yield higher returns, but pose greater risks. Find out about growth funds, blend funds, sector funds, indexed funds, as well as funds defined by market capitalization and many others. Learn the differences between the different kinds, to find the best one for you before exposing yourself to risks.
Related Resources from InvestorGuide.com
Mutual Fund Research Tool
Use our research tool to find in-depth data about mutual fund quotes, news, data, and profile information. Click here to view our mutual fund list or enter a mutual fund ticker here:
Featured Sponsor
|
|
|
