We consider the problem of how to set a compensation for a portfolio manager who is required to restrict the investment set, as it happens when applying socially responsible screening. This is a problem of Delegated Portfolio Management where the reduction of the investment opportunities to the...

The reward of a fund manager usually increases when the Asset Under Management (AUM) grows, while it decreases when the AUM shrinks. The AUM may grow either because of a higher value of the assets or because of new money flowing into the fund. Good performances of the fund with respect to its...