In the Mudarabah model, management compensation depends on actual profit. In the agency model, the fee is payment for service and can be known independently of profit.
These are different legal relationships, so the fund should not switch between them after the fact simply to guarantee management a desired return.
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Equity Funds: Purification and Fund Management
In the Mudarabah model, management compensation depends on actual profit. In the agency model, the fee is payment for service and can be known independently of profit.
These are different legal relationships, so the fund should not switch between them after the fact simply to guarantee management a desired return.