FIQH ADAPTATION (TAKYĪF FIQHĪ) FOR THE CONCEPT OF A PERFORMANCE FEE IN TAKĀFUL

Performance fees are a common feature of most alternative investment funds and are a fundamental part of the remuneration of many hedge fund investment managers. Such fees are often also referred to as incentive fees. A performance fee is defined as a payment made to a fund manager for generating positive returns. It represents an additional fee that investors are required to pay in addition to an annual fee for the manager. The basic rationale for performance fees is that they align the interests of fund managers and their investors and represent an incentive for fund managers to generate positive returns.