The choice between active and passive management is often seen as a simple binary for investors: you pay more for active management with the opportunity for outperformance or you pay less for passive management and content yourself with meeting the benchmark.
However, a new fee structure gives investors the potential to benefit from the best of both worlds. Several new funds have launched over the past year with a “fulcrum fee” structure that adjusts automatically with performance. If the fund lags or meets its benchmark, investors are charged index-level fees; if the fund outperforms, the fees rise proportionally.
Leveraging our Robo-Analyst technology, which analyzes the holdings of all 7,953 ETFs and mutual funds under coverage, we found a mutual fund that offers this attractive fee structure and allocates to high-quality stocks based on analysis of their return on invested capital (ROIC).