Insurer Generali and AllianceBernstein’s former CEO, Peter Kraus, have launched a new asset management venture that incorporates a performance-based model.
Dubbed Aperture Investors, the new entity will charge ETF-like fees that will increase only if the fund managers top their benchmarks.
The compensation given to managers will also be based on their performance. Aperture will pay managers a modest base compensation, which will increase only if the managers outperform.
The model is unlike the traditional fixed-fee structure, where managers’ compensation depends on the volume of assets.
At the same time, Aperture also has the option of returning unearned compensation back to clients.
The new entity will be headquartered in New York City and headed by Kraus as chairman and CEO.
“There are currently too many active managers managing too much money. Fixed fees and a lack of real capacity constraints have long incentivised managers to grow assets under management rather than pursue outperformance. This structure has led to years of poor performance that has eroded client trust in active management. We intend to change this by aligning manager and client incentives around outperformance,” Kraus noted.
Generali will offer up to $4bn of investment capital to Aperture for individual investment strategies. The move is pending board approval.
Generali Investments Partners head Carlo Trabattoni said: “The total AUM in the world amounts to well over $ 84 trillion, many active managers are underperforming and passive indexing is growing. With Aperture, we want to combine the interest for passive with the need for active.”