Discuss one advantage and one disadvantage to the client of each manager’s contracted fee structure.

Institutional investment consultant Wilsot Consultants (Wilsot) is reviewing multiple investment managers within a prospective client’s portfolio. Two of the managers, Vaudreuil Capital Management (Vaudreuil) and Pourtir Investments (Pourtir), have similar strategies that show comparable performance on a net-of-fees basis. Assessing the portfolio effects of management fees, a Wilsot analyst reviews both manager contracts to determine their advantages and disadvantages to the client. Checking client fee structures, the analyst notes Vaudreuil’s fees are AUM-based while Pourtir’s are performance-based.

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Discuss one advantage and one disadvantage to the client of each manager's contracted fee structure. Manager Vaudreuil Pourtir Advantage Disadvantage