Distinguish value generated by a manager from the return retained by investors.

Family Office Private Wealth Journal · Editorial research desk · 2 November 2026

Companion to Measuring skill in the mutual fund industry by Jonathan B. Berk; Jules H. van Binsbergen.

Decision in practice

A successful manager grows rapidly and raises fees. Even if the manager creates value, it may capture most of that value itself.

Committee assignment

Separate estimated dollar value added from the net return available to a new investor at today’s capacity and terms.

Record and decision rule

Keep an investor-level capacity memo. Reopen negotiations if growth or fees materially reduce the prospective investor benefit.

Illustrative application by the editorial desk. The source authors did not evaluate or endorse this procedure.