incentive fee

Incentive fee

Compensation paid to commodities trading advisers or to any practitioner who achieves above-average returns. Sometimes called performance fee.
Copyright © 2012, Campbell R. Harvey. All Rights Reserved.

Incentive Fee

A fee paid to an asset manager or other investment adviser whose investment decisions perform particularly well. When an asset manager makes money for clients, he/she also makes money for the company for which he/she works. These companies offer incentive fees in order to encourage wise (and profitable) investments. Incentive fees usually come out of the portfolios that do well, rather than out of the company's general funds. They are also called performance fees. See also: Bonus, Manager Universe (Benchmark.)
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved

incentive fee

Wall Street Words: An A to Z Guide to Investment Terms for Today's Investor by David L. Scott. Copyright © 2003 by Houghton Mifflin Company. Published by Houghton Mifflin Company. All rights reserved. All rights reserved.
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Should the incentive fee serve as a valid signal for good managers, we would expect funds with incentive fee provisions in 2004 to show, on average, a superior ability over the following two-year period.
Invariably, programs should embrace an incentive fee strategy that achieves and sustains maximum contractor performance with a measurable value to the government.
OFPP issued a checklist for handling incentive fee contracts.
(20) Incentive fee contacts fared better; still, half of the twenty-seven contracts reviewed failed to meet the target price, a key component of mission success.
Collectively, the Department of Defense (DOD) gives its contractors the opportunity to earn billions of dollars through monetary incentives--known as award fees and incentive fees. These fees are intended to motivate excellent contractor performance in areas deemed critical to an acquisition program's success, with award fees being appropriate when contracting and program officials cannot devise objective incentive fee targets related to cost, technical performance, or schedule.
Bondholders would be paid a cash amount of EUR132,273.61 per bond, which includes an incentive fee of 0.30%.
Ackermann, McEnally, and Ravenscraft [1] study the relation between incentive fee and risk-adjusted performance using Sharpe ratio as the proxy.
Advent Partner creates efficiencies in the complex partnership accounting process by automating its most difficult facets -- the reallocation of profit for the performance incentive fee, and the allocation of realized gains and losses for tax purposes.
This multiple-award, cost-plus incentive fee contract is valued at $53.8 million over 3.5 years, assuming all options are exercised.
Certain contracts may also include a onetime incentive fee payable upon the achievement of a gross revenue or expense target.
In connection with the transaction, Crescent Cap Advisors has agreed to establish a fee structure and amend its current investment management agreement with Crescent BDC to take effect immediately after the closing of the transaction.The fee structure includes annual base management fee rate reduced from 1.50% to 1.25%; six quarters of base management fee waivers, so that only 0.75% will be charged for such time period; annualized incentive fee hurdle increased from 6% to 7% while maintaining a 17.5% income incentive fee and six quarters of full waivers of the income-based portion of the incentive fee.