Billy Shears

Alternative Investment: Multi-Strategy vs. Single-Strategy Approaches

An additional benefit available in a multi-strategy fund, versus the selection of single-strategy funds, is the incentive fee expense risk that a multi-strategy fund manager undertakes. The investor pays incentive fees to each single-strategy fund manager based upon its individual performance, regardless of another single-strategy fund manager's underperformance. In most cases, the multi-strategy fund manager nets the performance across strategies before charging the incentive fee.