EDHEC backs Fidelity’s performance-based fee scheme

"(...) EDHEC Business School has welcomed Fidelity’s announcement of its plans to introduce performance-based fees but it has warned that strong focus on price would lead to a loss of interest in the quality of products. (...) Associate Dean for Business Development with EDHEC Business School and chief executive of a provider of a smart beta indices platform, ERI Scientific Beta, Noel Amenc, said: “We are currently witnessing a highly worrying phenomenon of in-sample optimisation of the performance and factor intensity of smart beta indices to the detriment of their robustness, with a fairly cynical strategy of ‘sell and forget’”. “By linking fees to performance, investors have the possibility of putting pressure on the quality of the products that are offered to them.” (...)"