(openPR) - For centuries the investment management world has been static in terms of fees that have been charged to its clients. The sector has evolved with new and "better" products but fees have not seen an evolution at all.
Los Angeles based boutique wealth management firm, Martin Asset Management, LLC might change the unbroken trend and set a new standard. "We want to be vested in our clients' success and failures - charging a management fee for non-performance doesn't seem a win-win situation; a manager should not be compensated for not producing an absolute return and by that I mean a positive return; no matter what the market environment holds. Martin Asset Management charges a 10% performance fee with a high water mark for its separate managed accounts with no annual management fee. Some critics argue that such a setup will ultimately lead to greater risk taking in order to produce positive numbers. I would argue that a performance fee with the high water mark will ensure that the contrary will happen. When a manager gets compensated for actual positive returns, he or she will treat the clients' assets as if they were trading their own accounts - and that is a fact", says Francisco Martin
Definition High Water Mark
The high watermark ensures that the manager does not get paid large sums for poor performance. So if the manager loses money over a period, he or she must get the performance above the high watermark before receiving a performance bonus. For example, say after reaching its peak a portfolio loses $100,000 in year one, and then makes $250,000 in year two. The manager therefore not only reached the high watermark but exceeded it by $150,000 ($250,000 - $100,000), which is the amount on which the manager gets paid the bonus.
"Static non-performance oriented fees don't fit the mold any longer. Investors are more than happy to pay for absolute returns. A manager must be vested in the clients' return prospective in order to create a portfolio that can perform in bull and bear markets. We merge the best of hedge funds and separately managed accounts into one product that ultimately will serve the client with better returns", says Martin.
Martin Asset Management
18375 Ventura Boulevard, Suite 538
Tarzana, California 91356
Francisco Martin
Tel. +1-310-230-5783
Martin Asset Management ("MAM") is a boutique alternative investment firm based in Los Angeles, California. MAM's absolute return portfolios and hedge funds are aimed to produce outstanding results in up and down markets.
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