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Whether they are being paid 0.000044% ($650k) of AUM or 0.0044% of AUM ($65m) doesn't really seem like it would make much of a difference to the fund's performa
by woah 3y ago
Whether they are being paid 0.000044% ($650k) of AUM or 0.0044% of AUM ($65m) doesn't really seem like it would make much of a difference to the fund's performance. If it is possible to get better performance by paying more, it seems like this would be a good idea.
In Norway's case, the pension fund is a really huge deal for the country, and managing it is probably like being a high level politician in some ways. You are probably present at all the most important events, and regularly having dinner with the president. They could probably easily pay $0. I don't think you can extrapolate this out to others.
- generic92034 3y ago> If it is possible to get better performance by paying more, it seems like this would be a good idea. That is a pretty big "if". And also it seems to me, that if shareholders have only one button to influence anything in their corporation, they tend to turn it to "high", even if there is no cause-effect relationship to high performance.
- rurp 3y agoBut how do you know that someone will be an above average manager, relative to others with a similar track record, pedigree, firm handshake or whatever? Of course the answer is that we don't know, it's spending tens of millions of dollars for a chance at getting an above average leader, and maybe ending up with a below average one instead.
- woah 3y agoRaising the management cost by a few thousands of a percent of AUM for a few percent chance of having a few percent better yield seems like it might make sense