Information Ratio-Based Solution

[ Base Fee + (IR X 100) ]


An industry first, WW IR Sensible Fees™ solve the fee problem by creating a simple structure with a pure zero or transparent low base fee for beta exposure plus a linear fee, directly linked to risk-adjusted outperformance only when it is earned, by using information ratio (IR).

IR is a measurement of excess return and the active risk taken relative to a specific benchmark. A positive IR indicates that positive excess returns were achieved over the measurement period while also taken into account the level of active risk used to beat the benchmark.

  • Combines a risk-adjusted fee to measure the true value of active management with a pure-zero or low-index-like base fee for beta
  • Integrates built-in guardrails for investors that deter asset managers from taking unnecessary or uncompensated risks to earn performance fees
  • Aligns fees to both the efficiency of our investment decisions and risk-adjusted returns
  • Ensures the asset owner only pays a low nominal fee for beta, when the manager matches or underperforms the benchmark
  • Maximum fee capped at 0.95%
  • One- and three-year rolling measurement periods available

Westwood (WW) has developed a new, innovative and simple fee framework available to eligible investors on strategies or products in which we are offering an Information Ratio-Based Sensible Fee™ framework. This framework, called Westwood Sensible Fees™, embraces the core principles of evaluating pure manager skill, addressing the low cost of indexing and protecting investors using risk-based fees — all with the goal of changing the probability of winning in an efficient asset class and reversing the historical precedent set in the industry by giving the asset owner the asymmetric advantage.

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