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Komfie Manalo, Opalesque Asia:

The concept of fair fees should be based a fund manager’s outperformance compared to lower fee alternatives, said Jean-François Comte, managing partner at Lutelia Capital, a specialist independent investment manager in arbitrage strategies, during the latest Opalesque 2016 U.K. Roundtable.

He told participants of the Roundtable, "I believe investors should focus on net returns and not just fees. Because net returns are, by definition, net of all fees and costs that not all investors are paying attention to."

Fees are a price for capacity

Comte was reacting to a question raised by Keith Haydon, the CIO of Man FRM about what are "fair" fees in the industry. Haydon said he often hears the word "fair" from people in the industry and references to a certain split of the return between investors and managers.

Haydon stated, "My own view is that ultimately we are all in a marketplace and naturally fees are a price for capacity. If you overprice your capacity, you won’t have any funds under management, but if you move your fees down too far you may hit a point where you can’t produce returns anymore. I think that will be more and more of an issue going forward as people discover that the cost of production of investment returns is a material......................

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