Mon, Jun 27, 2016
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. Opalesque Roundup: Hedge funds shrink as liquidations outpace new launches in Q1: hedge fund news, week 27[more]

    In the week ending 17 May, 2016, HFR said hedge fund liquidations declined narrowly to begin 2016 after rising sharply to conclude 2015, as investors positioned f

  2. Europe - Hedge funds keep powder dry over big Brexit bets, Hedge funds sense profit in Europe shock waves after Brexit vote, Soros warns Brexit may cause pound plunge worse than Black Wednesday, After Brexit: What will happen if Britain votes to leave the UK?[more]

    Hedge funds keep powder dry over big Brexit bets From FT.com: Hedge funds are shying away from big bets on Brexit, with many unwilling to risk further losses having already suffered a painful first half of the year. With the outcome of a UK vote on the country’s membership of the Europea

  3. News Briefs - ’Flash Boys’ get green light to launch stock exchange, Pimco says ‘storm is brewing’ in U.S. commercial real estate, Bankers get ready to rumble at Hedge Fund Fight Night, AIMA Australia celebrates 15th anniversary[more]

    ’Flash Boys’ get green light to launch stock exchange In an investing environment ruled by fast, the newest U.S. public stock exchange is banking on slow. Well, slower. IEX Group, which won Securities and Exchange Commission approval on Friday to go head-to-head with the New York Stock E

  4. Blackstone buys minority stake in New York-based credit hedge fund Marathon[more]

    Benedicte Gravrand, Opalesque Geneva: Blackstone Strategic Capital Holdings Fund, a vehicle managed by Blackstone Alternative Asset Management (BAAM), has acquired a passive, minority interest in Marathon Asset Management, for an undisclosed sum. Based in New York,

  5. Global markets fell, hedge funds gain in mid-June on Brexit, Fed rate concerns[more]

    Komfie Manalo, Opalesque Asia: Global financial markets declined through mid-June, as uncertainty associated with the upcoming Brexit referendum and expected U.S. Fed interest rate hike contributed to increases in volatility across asset classes, data provider