Asset Management Fees and Recipients

Definition

Recurring fees paid to a sponsor or manager for overseeing an investment, typically a percentage of assets, equity, or revenue, and paid regardless of performance, often ahead of investor distributions. For registered investment advisers, federal law restricts compensation based on a share of capital gains or appreciation^[1] but permits fees based on the total value of a fund averaged over a definite period or taken at definite dates^[2].

Federal law

A market and contract term. No Act of Congress defines it; the federal laws below apply as described.

1. Investment Advisers Act of 1940 (Title II of Pub. L. 76-768), Pub. L. 76-768, title II, § 205, 54 Stat. 847 (15 U.S.C. § 80b-5). Regulates registered investment advisers' advisory contracts, including compensation terms (15 U.S.C. § 80b-5). Official text: govinfo.gov, U.S. Government Publishing Office.
2. Investment Company Amendments Act of 1970, Pub. L. 91-547, § 25, 84 Stat. 1413 (amending Investment Advisers Act § 205, 15 U.S.C. § 80b-5). Clarified that asset-based fees are not prohibited performance compensation (15 U.S.C. § 80b-5(b)(1)). Official text: govinfo.gov, U.S. Government Publishing Office.