No. of Recommendations: 2
I ran across a money manager, Tom Hayes, who charges a performance based fee. This is something I'd not normally consider, but I have been looking into it.
I'm familiar with the 1% AUM model, which I don't like, and heard of the "2 and 20" fee structure as well.
Hayes charges 25% (for my account size, lower for larger) on profits above high water mark, and no management fee.
It seems patently outlandish on the surface. But working the numbers, it does not seem like such an advisor needs to generate huge outperformance.
Something like 3% annually more than (you could do, the SP500 will do, a 1% AUM advisor would do) would put you far ahead even after those fees.
I understand the argument that says, just stick it in an SP500 index fund, no one does better than that.
Except it does look likely that with the very high valuations currently, it could be a bad time to park your funds in an index.
And I suspect that there are certainly money managers who can deliver "alpha", so to speak.
I had not heard of Hayes until he randomly showed up on a video I was watching.
From what I saw of his philosophy (Buffet-like, buying good businesses when they are out of favor), it resonated with me.
OTOH, he was involved in some LIBOR scandal in the UK and served prison time, lol, so who would let someone like that manage any of your money?
Interested in any thoughts ...
Mark
