Alternative Investment Performance Fee Arrangements and Implications for SEC Regulatory Policy: Comment

William Margrabe

Bell Journal of Economics, 1976, vol. 7, issue 2, 716-718

Abstract: Working from the assumptions that Modigliani and Pogue made in their recent article, this comment explains why there is no incentive for a portfolio manager to prefer their Plan 1 fee over their Plan 2 fee, demonstrates why the portfolio manager and investment company are superfluous, and rebuts the authors' unduly pessimistic conclusions about portfolio manager behavior in an unregulated capital market.

Date: 1976
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