The traditional Fee structure for an active manager is to charge an annual management fee (typically between 1% and 2%), and then charge an additional performance fee if the fund happens to make money. With this fee structure an investor will pay a high annual fee regardless of whether the fund makes money or not. And then if the fund does make money, the performance fee kicks in and the investor pays an even bigger fee. This makes a lot of sense for the manager, but is not fair to the investor.
At GANE our philosophy is that if the investor does not make money, neither do we. We will charge no annual management fee, and a performance fee of 15% on returns above 6% pa. This means that until the Fund makes above 6% pa, we receive no fees. If we under-perform in one year, and do not make 6%, that under-performance has to be made up in addition to the next years 6% before we make fees (called a High Water mark). Additional costs to the investor are the direct operating costs of the Fund (audit/brokerage), estimated to be between 10 and 40 bps (0.1%-0.4%) pa, and a Bid/Offer fee of +-0.4% upon entering/exiting the Fund.