Index submission criticised
The Financial Markets Authority has released an information sheet explaining how it expects fund managers to disclose performance-based fees to investors.
It wants it made clear that the absence of a high-water mark can mean investors pay twice for the same performance and for performance fees to be tied to an “appropriate” index.
David Ireland and Catriona Grover of Kensington Swan, made a submission saying it was incorrect for FMA to describe such benchmarks as “inappropriate”.
“This is a commercial matter, and should not form part of FMA’s regulatory guidance. Provided the hurdle rate is clearly identified, and where it differs from the appropriate market performance measure that distinction is clearly and effectively disclosed, that should be the end of the matter. Hurdle rates that must be surpassed before a performance fee is charged may differ from the relevant market index measure for a number of commercial or marketing-related reasons, many of which may be reasonable.”
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)
