The best incentive / reward system is based on performance only. "25 over 6" pays the fund manager 25% of all annual profits over 6%. If the investor doesn't do well, neither does the fund manager. If the fund manager can't beat 6% (below average annual market returns), then they get nothing and is perhaps a sign they shouldn't be in that business. Or they certainly won't be for long if they have zero income year after year.