Why doesn’t Cable Car charge a management fee to institutions?

Cable Car believes the alignment of incentives from performance-based fees is the best compensation model for the industry. The firm’s base 30% incentive fee is chosen so that gross performance in keeping with long-run equity market returns would result in fees comparable to typical management fees in the industry, while under-performance would be penalized and out-performance would be rewarded.

With a self-sustaining business model from management fee-only accounts, Cable Car also wishes to avoid introducing business risk from dependence on management fees from its larger institutional accounts.

Posted in: Institutional allocators