Sun, Oct 26, 2014
A A A
Welcome Guest
Free Trial RSS
Get FREE trial access to our award winning publications
Alternative Market Briefing

Emerging hedge fund managers struggle to cover expenses with management fees

Monday, December 09, 2013

Precy Dumlao, Opalesque Asia for New Managers:

Emerging hedge funds struggle to cover operational expenses solely on their management fee alone and do not realize comfortable operating margins at any point below $1bn in assets under management, that was the finding of the second annual Hedge Fund Business Expense Benchmark Survey by Citi Prime Finance’s Global Business Advisory team.

The survey also found that institutional hedge funds begin to realize better operating margins as they surpass $1.5bn and move beyond the $5bn AUM threshold. At the same time, the average management fee continues to be well below the historical 2.0% level, on average management fees for franchise firms are 1.53%, the survey said.

"Based on this analysis and our survey responses, we estimate that hedge fund managers need at least $300m AUM to break even. Firms with lower amounts of AUM will not be able to cover their management company costs without additional capital or incentive fee payouts. These management company costs include third party expenses, salaries for the investment team and total compensation for investment support and business management personnel," Citi Prime said in the survey.

Citi found that emerging fund managers with $500m in AUM, realize operating margins of only 69 basis points ($3.4m). At $900m AUM, operating margins incre......................

To view our full article Click here

Banner

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. Commodities - Oil wreaking havoc on small-cap energy stocks sliding 36%[more]

    From Bloomberg.com: Owning almost anything in the U.S. stock market has been a losing proposition since September. Owning smaller energy companies has been a catastrophe. Hercules Offshore Inc. and Resolute Energy Corp. are among 19 oil-and-gas equities in the Russell 2000 Index that lost more than

  2. Investing - Hedge funds favor equity long/short, Strategic bond managers hedge against further high yield sell-off[more]

    Hedge funds favor equity long/short From Securitieslendingtimes.com: Equity long/short strategies will generate good returns for hedge funds in the future, according to a panel at this year’s Risk Management Association Conference on Securities Lending in Naples, Florida. Panellists Sand

  3. Legal - Ex-hedge fund analyst weeps as judge hands down 5 year sentence, Former Columbus investment manager Steven P. Moore indicted on theft charges, SEBI confirms ban for Hong Kong hedge fund, SEC announces enforcement action against compliance officer[more]

    Ex-hedge fund analyst weeps as judge hands down 5 year sentence From Hereisthecity.com: An ex-hedge fund analyst was sentenced to 5 years in prison for his role in insider-trading scheme. The New York Post reports that former hedge fund analyst Matthew Teeple was sentenced Thursday to fiv

  4. Goldman in talks to acquire IndexIQ[more]

    From Bloomberg.com: Can Goldman Sachs put ETF investors on a liquid diet? Goldman is in talks to acquire IndexIQ, Reuters has reported. Index IQ is a small exchange-traded-fund firm known mostly for products that replicate hedge fund strategies, called "liquid alternative" ETFs. While IndexIQ has 11

  5. Other Voices: CALPERS dilemma should be a warning to hedge funds wanting institutional investors[more]

    From Ian Hamilton, founder of IDS Group. A quick comment on the CALPERS’ disinvestment from the hedge fund market and the jitters it is causing. Pension Funds should not be sheep and follow CALPERS’ decision as the issues that CALPERS has with hedge fund investments are in many ways unique t