Real Active Management
Most mutual funds do not have board members and directors with an equity stake in the mutual fund that their manager(s) are administrating. In other words, the directors and board members don't directly impact the future performance of the fund. Real active management then, is when every manager and director has a vested interest in the success of the fund. Private-equity is often real active management since a privately owned company usually has just one owner that make strategy decisions at the board level.
However, the problem with this business model where the manager's money is invested plus he receives a fee dependent on the performance of the managed vehicle was observed in 2008. It was heralded as the perfect solution as it combines the interest of the client with the ones of the manager. Many money managers who had their own money invested in these vehicles saw their income being reduced to pure management fees rather than performance fees. In some cases the losses incurred by their funds had been so big that it was almost impossible to recoup these losses over the next couple of years. Hence they decided to close their funds. By doing that they robbed the investors of the chance that their investments recover.
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