The recent performance-fee settlements between five fund companies and the Securities and Exchange Commission will probably not shake investor confidence, but, shareholder advocates worry, they might rattle the companies considering adopting the more complicated model.

"As a general matter, performance fees are consistent with the promise of active management," said Mercer Bullard, founder of shareholder advocacy group Fund Democracy. "It more strongly aligns the manager's interest with that of shareholders."

Subscribe Now

Access to premium content including in-depth coverage of mutual funds, hedge funds, 401(K)s, 529 plans, and more.

3-Week Free Trial

Insight and analysis into the management, marketing, operations and technology of the asset management industry.