{
 "@context": "https://schema.org",
 "@type": "DefinedTerm",
 "@id": "https://wulfkaal.github.io/entities/performance-fees",
 "identifier": "kaal:entity:performance-fees",
 "name": "Performance fees",
 "termCode": "performance-fees",
 "inDefinedTermSet": {
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 },
 "author": {
  "@type": "Person",
  "name": "Wulf A. Kaal",
  "identifier": "https://orcid.org/0000-0003-0757-275X"
 },
 "dateModified": "2026-07-29",
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   "name": "status",
   "value": "derived"
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   "value": 4
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   "@type": "PropertyValue",
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   "value": [
    "2009",
    "2016"
   ]
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 "subjectOf": [
  {
   "@type": "Claim",
   "@id": "https://wulfkaal.github.io/claims/1428387-006",
   "identifier": "kaal:claim:1428387-006",
   "text": "Because realization events for private equity investments occur infrequently, hedge fund managers have an incentive to avoid side pockets and to use estimated valuations for those investments instead.",
   "abstract": "The infrequency of realization events of private equity investments creates incentives for hedge fund managers to avoid side pockets and instead use estimates for the valuation of private equity investments.",
   "citation": "Kaal, Hedge Fund Valuation Retailization, Regulation, and Investor Suitability (2009). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1428387",
   "datePublished": "2009",
   "claim_type": "mechanism",
   "confidence": "argued",
   "is_failure_mode": false,
   "scope_conditions": [
    "where the hedge fund holds private equity style investments",
    "where performance fees cannot be charged on side-pocketed assets"
   ],
   "source_pdf_sha256": "6aa3a280dc6750723be2389f3af2aabf3a16c4ce20e49fcdaddd7f2ea95a67aa",
   "status": "current"
  },
  {
   "@type": "Claim",
   "@id": "https://wulfkaal.github.io/claims/2337268-030",
   "identifier": "kaal:claim:2337268-030",
   "text": "The SEC excludes the value of a primary residence and related debts from the qualified client net-worth test because persons who clear the threshold only by counting their home are less able to bear the risk of performance fee arrangements.",
   "abstract": "Because persons who meet the net-worth test by virtue of including the value of their primary residence are less likely to be able to bear the risk of performance fee arrangements, the SEC excludes the value of a person's primary residence and related debts from the net-worth test.",
   "citation": "Wulf A. Kaal, Investment Adviser Regulation (2013). SSRN: https://ssrn.com/abstract=2337268",
   "datePublished": "2013",
   "claim_type": "mechanism",
   "confidence": "argued",
   "is_failure_mode": false,
   "scope_conditions": [
    "net-worth test for qualified client status under the IAA"
   ],
   "source_pdf_sha256": "7075ce35282a8ee75b81ae3dec0e19f68631beae7f3c3a00ab2827538dc9e302",
   "status": "current"
  },
  {
   "@type": "Claim",
   "@id": "https://wulfkaal.github.io/claims/2337268-042",
   "identifier": "kaal:claim:2337268-042",
   "text": "The IAA bars compensation tied to the performance of the client's account but permits compensation tied to the average value of the client's assets, so fee regulation targets performance linkage rather than asset based fees.",
   "abstract": "It also prohibits performance-based compensation if the adviser's fee is linked to the performance of the client's account.110 The IAA does, however, allow investment advisers to tie their compensation to the average value of the client's assets.111",
   "citation": "Wulf A. Kaal, Investment Adviser Regulation (2013). SSRN: https://ssrn.com/abstract=2337268",
   "datePublished": "2013",
   "claim_type": "condition",
   "confidence": "asserted",
   "is_failure_mode": false,
   "scope_conditions": [
    "fee arrangements in advisory contracts under the IAA"
   ],
   "source_pdf_sha256": "7075ce35282a8ee75b81ae3dec0e19f68631beae7f3c3a00ab2827538dc9e302",
   "status": "current"
  },
  {
   "@type": "Claim",
   "@id": "https://wulfkaal.github.io/claims/2714974-037",
   "identifier": "kaal:claim:2714974-037",
   "text": "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.",
   "abstract": "Most importantly, investment advisers to investment companies may not charge an investment company a performance fee.",
   "citation": "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",
   "datePublished": "2016",
   "claim_type": "mechanism",
   "confidence": "argued",
   "is_failure_mode": false,
   "scope_conditions": [
    "applies to advisers to registered investment companies"
   ],
   "source_pdf_sha256": "7764601d3ed5bb056b58949e8411eff9dfb9855f143719062030c980c5fa801b",
   "status": "current"
  }
 ],
 "description": "4 claims in the published works of Wulf A. Kaal carry the concept tag 'performance-fees'. Derived node: a roster, not an adjudicated definition."
}