Investment funds remunerate more and more their investment managers with a fee based on performance in addition to a management fee. Performance fees are considered as a tool to align the interests of both investors and investment managers.
In Luxembourg, the second largest fund center outside of the United States, there is no regulatory restrictions in terms of performance fees, the best practice being to obtain the validation of the CSSF. As every calculation method is possible, it is essential to understand the pitfalls and issues linked to performance fees calculation.
PwC's Academy is pleased to offer a training workshop dedicated to understanding the principles of the performance fees calculation and to providing some considerations impacting the main actors before introducing a performance fee. This training will also highlight the different issues linked to performance fees, give some insights on best practices and provide the opportunity to go through practical application through real life exercises.
Upon completion of the course, participants will be able to:
- Distinguish and understand the different methods of performance fees calculation
- Assess the advantages and disadvantages of each calculation method
- Identify the potential issues and monitor the risks linked to the introduction of performance fees
- Perform validation checks on performance fees calculation
- Market practice in Luxembourg for UCITS funds
- Basic principles of performance fees calculation and their pros and cons
- Classic method (High Water Mark, Loss Carried Forward, Benchmark, Hurdle, Cristallization, etc.)
- Series of shares method
- Equalization method (equalization credit/debit, depreciation deposit, etc.)
- Carried interest
- Practical exercises (analysis of the performance fees calculation method described in the prospectus, review and improvement of calculation files, review of the consistency between the prospectus and the calculation file, calculation of equalization credit/debit , etc.)
- Key factors (risk management, marketing, etc.) to consider before implementing performance fees. Analysis developed from the following perspectives:
- Analysis of most common mistakes linked to the performance fees calculation (examples of CSSF 2002/77 cases)
- Fund Service Providers (from Fund accounting, Risk Management, Regulatory departments, Client Relationship Managers, etc.)
- Fund Promoters
This training will be coordinated by Frédéric Botteman, Partner, PwC Luxembourg.
It will be animated by specialists of PwC Luxembourg working on performance fees issues on a daily basis.
Number of participants
Limited to 16 participants, to ensure good interactivity