Most managers charged performance fees of 15-20 per cent as soon as they beat cash, which is unreasonable as specialist strategies are not risk free, the firm's senior investment analyst Chris Bigg said.
Specialist strategies include variable beta, equity multi-strategy and equity market-neutral investment styles.
"Given specialist strategies are not risk free, we believe a performance fee hurdle of cash plus 2 per cent after fees is appropriate for market neutral and equity multi-strategy offerings," he said.
"We also believe a performance fee hurdle of cash plus 3 per cent after fees is appropriate for variable beta managers, considering a proportion of their performance fees will be derived from beta and not alpha."
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