Kelli Moll Quoted in Hedge Fund Alert on “1-for-30” Fee Model
Akin Gump investment management partner Kelli Moll has been quoted in the Hedge Fund Alert article “Tax Pros Decipher Texas Teachers Fee Model,” regarding a new fee structure championed by the Teacher Retirement System of Texas, known as “1-for-30.” The article says it is raising some difficult tax issues for fund managers.
According to the article, the new model, which has been adopted by several dozen managers, calls for investors to pay a 30 percent performance fee on profits above a specified benchmark. Questions remain, however, as to how to apply “1-for-30” when a fund loses money but still beats its benchmark.
“The issue for tax is, how can you allocate performance to the manager when there is a loss?” said Moll, who has helped several fund managers adopt “1-for-30” terms. “There are different views on this. There’s a lot of tax planning that needs to be done to preserve an incentive allocation.”