Shock Absorber Fees

Fusion Asset Management introduced pioneering performance fee structure – Shock Absorber Fees (US Patent pending, Number US 61/303,397, Fusion Investment Advisors Limited).

The main features of Shock Absorber Fees (SAFe) are:

• Transfer of risk from investors to the manager through recourse to the manager’s fees;
• Asymmetric nature of the recourse when manager is covering larger percentage of loss than he is receiving in gains;
• Dynamical nature of the exposure when the amount of protected exposure is linked to the fees already accumulated.

SAFe structure is flexible and can be implemented on a fund or managed account level. It can be done against any benchmark, hurdle and can include tracker funds or absolute return funds.

Investment products with the Shock Absorber Fees demonstrate dramatic improvement of statistical characteristics of returns, such as downside volatility, maximal drawdown and Sharpe Ratio.

Alone with improving investment products and removing a conflict of interests between managers and investors, SAFe also contributes to

• Improving global financial stability by creating an incentive for responsible money management,
• Providing considerable social and economic benefits by partial de-risking of investments, better protection of non-professional clients directly or indirectly involved in financial markets,
• Brining wider participation in financial markets leading to higher rate of investment and global productivity growth.

Fusion Asset Management offers advisory services related to the best implementation of SAFe structures and statistical analysis of optimal parameters for SAFe fee arrangement.

Shock Absorber Fees papers

Fusion SAFe+Range

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