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Andrew Fife

I agree, the best way to motivate is to align interests and backload as much compensation until after the investors goals have been met. I'm curious to read you analysis of management fees. Thanks for the interesting post!

RG

Thanks for an interesting post. From my read of carry, the fund managers are effectively incentivised to swing for the fences - they get a substantial share of the upside with no downside risk. (They are granting themselves a free call option at the cost of the investors. I would have thought this assymetric incentive system would encourage excessive risk taking (just like we saw at the height of the boom.) I'd be interested on your thoughts on this.

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