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Alternative Market Briefing

Seward & Kissel’s hedge fund report finds an increase in equity funds and management fees differ with strategies employed

Wednesday, April 03, 2013

Beverly Chandler, Opalesque London: Seward & Kissel announced the findings of its annual New Hedge Fund Study: 2012 Edition of US based hedge fund managers, including:

  • In 2012, 64% of new hedge funds had equity or equity-related strategies (up 14% from the 2011 study).
  • Management fees were generally higher for non-equity strategies, while incentive allocation rates continued to be pegged at 20% of annual net profits across all strategies.
  • More funds permitted monthly redemptions in 2012 as compared to 2011 (the percentage increased from about 25% in 2011 to 36% in 2012), and a higher percentage of equity strategies had lockups or gates as compared to non-equity strategies.
  • Sponsors of both U.S. and offshore funds set up master-feeder structures over 80% of the time. Most offshore funds were established in the Cayman Islands.
  • In the area of seed capital, the initial funding in many of the bigger deals was between $75 million and $150 million typically locked up for two or three years; for the smaller deals, the amounts ranged from $10 million to $50 million.
Seward & Kissel conducts an annual hedge fund study of newly formed hedge funds sponsored by new US based managers entering the......................

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