PT  - JOURNAL ARTICLE
AU  - Thomas S. Coleman
AU  - Laurence B. Siegel
TI  - Compensating Fund Managers for <em>Risk–Adjusted</em> Performance
AID  - 10.3905/jai.1999.318908
DP  - 1999 Dec 31
TA  - The Journal of Alternative Investments
PG  - 9--15
VI  - 2
IP  - 3
4099  - https://pm-research.com/content/2/3/9.short
4100  - https://pm-research.com/content/2/3/9.full
AB  - A risk-adjusted performance fee structure which addresses incentive compatibility and helps reduce asymmetry, while at the same time being feasible and easy to implement would be a practical performance fee structure that principally compensates the manager for risk-adjusted performance by adjusting for the volatility of returns. For a fund manager this can provide a credible way to offer a volatility target as well as a return target, since the manager's compensation is contingent on realized volatility. For risk-averse investors this opens up the opportunity to choose managers based on the manager's incentives to meet risk as well as return objectives.