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Whats the go with performance fees?

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  • #671
    Lucas89
    Participant

    Hi everyone! I’m pretty new to investing. Theres still some things I can’t seem to understand (Even after a few hours of research).

    When looking into ETF’s, theres all sorts of fees. E.g. Magellan Global Equities Fund (MGE) charges a management fee of 1.35% AND a performance fee of 10%.

    What are these fees? I get Management fees, but what’s a performance fee? How do they charge those fees?

    I’ve bought ETF’s through Anz Share Investing but the only fees I’ve paid have been brokerage.

    #673
    R.D.
    Keymaster

    Hi Lucas, I personally like looking at the older LIC’s and ETF’s that don’t charge a performance fee. There are ones out there that just have a flat management fee.

    #674
    Lucas89
    Participant

    Awesome thanks, can you point me in the right direction?

    #675
    R.D.
    Keymaster

    The Vanguard products are popular e.g. VAS and VGS, they charge a management flat fee. VAS’s current management fee is 0.10% pa.

    #676
    Daniel
    Participant

    Performance fees are a payment made to an investment manager for generating positive returns. A management fee is charged regardless of returns. A performance fee is generally calculated as a percentage of investment profits, often both realized and unrealized.

    #677
    Lucas89
    Participant

    Performance fees are a payment made to an investment manager for generating positive returns. A management fee is charged regardless of returns. A performance fee is generally calculated as a percentage of investment profits, often both realized and unrealized.

    Awesome thanks for that explanation Daniel,

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