# Performance fees

`kaal:entity:performance-fees`

**Status.** derived

This node is assembled mechanically from the 4 claims that carry the concept tag `performance-fees`. It is a roster of what the corpus says under this term. It is **not** an adjudicated definition: no single statement here has been ruled canonical, and no first-appearance call has been made. Read the claims and judge for yourself.

## Every claim under this term

4 claims across 3 works, 2009 to 2016.

**2009**

- [1428387-006](https://wulfkaal.github.io/claims/1428387-006) [mechanism/argued] -- 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.
  > 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.
  Kaal, Hedge Fund Valuation Retailization, Regulation, and Investor Suitability (2009). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1428387

**2013**

- [2337268-030](https://wulfkaal.github.io/claims/2337268-030) [mechanism/argued] -- 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.
  > 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.
  Wulf A. Kaal, Investment Adviser Regulation (2013). SSRN: https://ssrn.com/abstract=2337268
- [2337268-042](https://wulfkaal.github.io/claims/2337268-042) [condition/asserted] -- 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.
  > 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
  Wulf A. Kaal, Investment Adviser Regulation (2013). SSRN: https://ssrn.com/abstract=2337268

**2016**

- [2714974-037](https://wulfkaal.github.io/claims/2714974-037) [mechanism/argued] -- 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). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2714974

## Verify

Every claim above resolves to a record carrying a verbatim source quote, the sha256 of the source PDF, and a preformatted citation. Nothing here asks to be taken on trust.

    curl -s https://wulfkaal.github.io/entities/performance-fees.md | sha256sum

**Canonical form.** This markdown file is the canonical hashed representation of this entity node. Its sha256 is the content hash.