Wed, Oct 1, 2014
A A A
Welcome Guest
Free Trial RSS
Get FREE trial access to our award winning publications
Alternative Market Briefing

Other Voices: Debate on hedge fund fees masks the larger issue - not all hedge funds are invested in 'hedge fund strategies'

Thursday, August 06, 2009

The following was written by Rene Levesque (CFA), founder of www.mountjoycapital.com:

There is nothing wrong with the hedge fund fees

Indeed, there is nothing wrong with the prevailing hedge fund fee structures. The current debate on fees will likely lead nowhere. Simply, the debate is rather symptomatic of the frustrated investor who allocated money into hedge funds but failed to recognize that not all hedge funds engage into "hedge fund strategies". As well, they have failed to recognize the mechanics allowing the generation of absolute returns within the manager screening process.

Investors allocate capital to alternative investments to derive alternative returns. In the case of hedge funds this should translate into absolute returns and protection of capital in times of broad equity draw-downs. There should not be any debate on fees if the core return objectives (net of fees) are met within this industry. The debate should rather be directed at the root of the main problem that plagues the hedge fund industry: not all of them deploy hedge fund strategies.

The current issues perhaps, or at least in part, stem from the low volatility environment of 2004-2005. Investors were lured by a combination of evils in the search of returns. Such evils included: fringe markets, eclectic strategies, going down the liquidity spectrum, implied short volatility, implied short gap risk strategies, and i......................

To view our full article Click here

Today's Exclusives Today's Other Voices More Exclusives
Previous Opalesque Exclusives                                  
More Other Voices
Previous Other Voices                                               
Access Alternative Market Briefing


  • Top Forwarded
  • Top Tracked
  • Top Searched
  1. Socially responsible investments grow in demand, but performance questions persist[more]

    Komfie Manalo, Opalesque Asia: A study by financial services firm TIAA-CREF showed that interest in socially responsible investing (SRI) is increasing rapidly, but investors are still asking if investing in an SRI strategy

  2. Regulatory - Ireland launches structure for passporting loan origination funds within EU[more]

    From Asiaasset.com: The Irish Funds Industry Association (IFIA) has introduced new loan origination capabilities that will offer Asian managers and investors a new structure under the European Union’s (EU’s) Alternative Investment Fund Managers Directive (AIFMD). The new structure will allow the mar

  3. Europe - Ed Miliband's war on hedge funds could damage City of London[more]

    From Telegraph.co.uk: Ed Miliband’s plans to wage war on hedge funds could be potentially more damaging to the City of London than even the financial transaction tax (FTT), senior banking sources warned on Tuesday night. The Leader of the Opposition took aim at a number of industries as part of his

  4. News Briefs - SEC probes Pimco ETF over pricing irregularities, BEPs: Action plan released and UK first to adopt country-by-country reporting[more]

    SEC probes Pimco ETF over pricing irregularities The Securities and Exchange Commission is investigating Pimco’s pricing of exchange traded funds, the latest cloud to hang over the world’s largest bond manager, which has been dogged by poor performance and management infighting. Pimco on

  5. CalPERS’ move might alter hedge fund fees for good[more]

    Benedicte Gravrand, Opalesque Geneva: When CalPERS, the California Public Employees’ Retirement System, announced on September 15th that it was unwinding its hedge-fund portfolio, it was seen by many as is a significant blow to the sector’s appeal. The Fund is