I have several junk email addresses that get all sorts of things sent to them seemingly at random and today was no except. I get an email from a group touting their wares so I decided to have a look at their website seeing I had nothing better to do. They offer all sorts of things including managed accounts and I am always interested in what people charge for this sort of thing. The first thing I noticed was that they charge a performance fee – this is not unusual, lots of groups do this. What caught my eye was that the benchmark they set themselves to help themselves to 20% of whatever (after management fees) was made was the cash rate – that’s right the cash rate which currently sits at 1.5%. So the threshold for taking a performance fee is 1.5% pa. The industry wide benchmark for such things is the index against which you are competing.
So if you had an account of $1,000.000 that made 3% or $30,000 and the cash remained at 1.5% they would take 20$ of the difference off you – all for the privilege of beating the cash rate. I am seriously in the wrong line of work……
