Alternative Market Briefing

Underperforming hedge fund managers add pressure to fee structure (Part 2)

Tuesday, May 08, 2012

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Diego Fluxa From Precy Dumlao, Opalesque Asia:

In Part one of this series about hedge fund fee structure, participants in the latest Opalesque French Roundtable all agreed that restructuring fees could play a crucial role in regaining the trust of allocators back into the hedge fund industry.

But European hedge fund managers who took part in the Roundtable have noted that one of the major problems facing hedge fund fees and the industry as a whole, are the underperformance of some managers. While Diego Fluxa, head of alternative investments at Rothschild & Cie Gestion, the asset management arm of the Rothschild Group in Paris, France admitted that there would always be good managers, they are low in supply but the demand is high.

The France Roundtable took place in Paris last month and was sponsored by Lyxor Asset Management and Eurex.

"These firms are still able to charge 2/20 or even 3/30. I am not saying these firms have to change anything – like transparency for instance - but have in mind that a rule of investment life is the more players you have, the lower the average. All in all, fees have to go down," Fluxa explained.

Also, the current low-yield environment makes it absolutely unbearable for investors to pay 2/20, because the split be......................

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