Asset managers drop lucrative fee as new guidelines bite

New EU regulations have put an end to performance fees, where a manager can keep a portion of a fund's returns themselves as a bonus.

Photo: Lærke Posselt

As of January 1, managers of traditional equity-based investment funds are not permitted to demand performance fees based on returns.

New guidelines by the European Securities and Markets Authority (ESMA) require there to be a connection between the cost structure of funds and the strategy they use. The guidelines were phased in throughout 2021, and will now have big consequences for the costs at a number of fund management companies.

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