kaal:claim:2714974-037

The prohibition on performance fees for investment companies is the most important structural difference from hedge funds, which rely heavily on performance fees of up to 20 percent of capital gains and appreciation to give advisers incentives to produce absolute returns.

Most importantly, investment advisers to investment companies may not charge an investment company a performance fee.

Kaal and Oesterle, The History of Hedge Fund Regulation in the United States (2016), Relaxing the Regulation of Mutual Funds, p. 28
https://ssrn.com/abstract=2714974 · source PDF

Kaal and Oesterle, The History of Hedge Fund Regulation in the United States (2016). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2714974

• applies to advisers to registered investment companies

mechanismsupport: arguedprivate-fundsrisk-and-incentives

• supported_by kaal:claim:2715083-017 Alternative mutual funds generally cannot deliver the same absolute returns as hedge funds, a shortfall some a...
• extended_by kaal:claim:2811729-027 Unconstrained mutual funds take on private fund-like risk without a corresponding return advantage: private fu...

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