Incentive Fee

Incentive Fee? - Fees are often paid as motivation to hedge fund general partners. On a less often basis such fees may be paid to a mutual fund manager. How much compensation is received will be based on an evaluation of the person?s performance. This will generally rely upon something associated with the benchmark index. Although this type of compensation could apply to any professional manager of financial areas, it is most often relevant to individuals that actually manage funds. There is debate over whether such incentives might inspire more risk on the part of managers, but it hasn?t deterred the practice from being utilized.