Performance-based fees are scarce in the mutual fund industry and most likely will remain so, due to the complexity of managing them, the lack of industry standards and the fact that they tend to reward portfolio managers more than they do investors.

Only about 200 funds, or 5% of the 4,000 funds on the market, are tied to performance-based fees, according to Strategic Insight of New York. Excluding Fidelity Investments and Vanguard, which control 90% of the $600 billion of assets invested in such funds, less than $60 billion of equity fund assets are subject to performance-based fees. Half of the funds that employ performance-based fees have assets of more than $1 billion, while about 20% have assets of less than $100 million.

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