FMA tackles performance fees
The Financial Markets Authority has released an information sheet explaining how it expects fund managers to disclose performance-based fees to investors.
It said a high-water mark would ensure that a manager who lost money must do more than recover before it started charging a performance fee.
“The FMC Act does not require the use of a high-water mark,” the FMA said. “Investors however, will be affected by the absence of one. The absence of a high-water mark means the fund manager may be rewarded for the same performance, and this must be clearly explained to investors in the product disclosure statement (PDS). Failure to do so would most likely result in a fee description that is misleading.”
It said managers would need to make it clear in a PDS if a high-water mark did not apply and what that would mean.
Click the button below to subscribe and will have free unlimited access for a limited time to full article and all other articles on the site.
You will also be able to comment on articles on Good Returns.
![[Weekly Wrap] Research shows KiwiSaver is a key issue in the election; GRTV Special looks at what's on offer.](https://goodreturns.publit.io/file/c_fill,w_300,h_200/36b7de93-7b53-4a06-855a-4a8f4009a280.webp)
