The industry practice of using inflated brokerage commissions (“soft dollars”) to pay service providers incentivizes excessive turnover, which adds to client expenses and hides the true costs of investing. Cable Car’s principal invests the majority of his investable assets in the strategy and does not have a disincentive to use company funds to purchase research. Instead, Cable Car can be more judicious with its use of research services and avoid distractions and potential conflicts of interest, while minimizing commissions and maintaining full transparency with clients. Cable Car compensates service providers directly using its own funds, not with client assets.
Posted in: Institutional allocators