Montana is exploring performance-based fee models

The $16.4bn Montana Board of Investments is considering the introduction of performance-based fees for its active managers, weighing the risks and costs related to paying asset managers on a sliding scale based on how they measure up to their benchmark.

Currently all of the state’s equity managers are paid under a fixed fee schedule, and the state investment board has not definitively decided to change that, according to Montana’s Director of Public Market Investments, Rande Muffick. The state’s investment staff has begun exploring a range of options for different fee structures, and has a “heightened interest” in performance-based fees, Muffick said at the board’s February meeting.

“It isn’t really a change yet, it’s more of a change in mindset than anything,” Muffick told the board. “The idea of performance-based fees doesn’t match as well in some types of portfolios as others , but given what’s going on in the industry and the underperformance, largely, of active managers as a whole, we have a heightened interest in looking at performance-based fees, more so than we have in the past.”

Read the full story: Montana is exploring performance-based fee models

Published by Money Management Report/Pageant Media.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s