TY - JOUR T1 - Compensating Fund Managers for <em>Risk–Adjusted</em> Performance JF - The Journal of Alternative Investments SP - 9 LP - 15 DO - 10.3905/jai.1999.318908 VL - 2 IS - 3 AU - Thomas S. Coleman AU - Laurence B. Siegel Y1 - 1999/12/31 UR - https://pm-research.com/content/2/3/9.abstract N2 - 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. ER -