Wed, May 24, 2017
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

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 Exclusive: Time to invest in robotics? (part 1)[more]

    Benedicte Gravrand, Opalesque Geneva for New Managers: The London-based, Swiss-born manager of the RoboCap UCITS Fund, talks to Opalesque about investing

  2. Investing - Hedge funds have been selling big winners this year, Hedge funds are betting $1 billion that Snapchat shares are going to drop, Here are the biggest bets made by top hedge funds in the first quarter[more]

    Hedge funds have been selling big winners this year From CNBC.com: Hedge fund managers' most popular stock to start the year has been a familiar name that is falling short in terms of performance, while the least popular companies all have been crushing the market. Procter & Gamble

  3. Investing - Third Point's Loeb surfs on as hedge fund washout continues, George Soros has added to his losing bets against the stock market, Hedge funds, VCs and the CIA are throwing money at ex-Bridgewater data scientists' startup, Hedge funds shed retail amid fears of "apocalypse"[more]

    Third Point's Loeb surfs on as hedge fund washout continues From Reuters/Nasdaq.com: Billionaire investor Daniel Loeb said on Thursday that he is still making money even as the hedge fund industry struggles. Loeb, who oversees the $16 billion hedge fund firm Third Point LLC, sa

  4. Investing - Tudor Jones backs AI hedge funds, Massive hedge fund trades highlight insider buying: GE, Pentair, Tempur Sealy, Apollo Global and more, Hedge funds big wigs are buying consumer and selling tech, here's the stocks[more]

    Tudor Jones backs AI hedge funds From FT.com: Hedge fund magnate Paul Tudor Jones has invested in a brace of artificial-intelligence powered "quantitative" hedge funds, underscoring the increasing acceptance that the industry will need to turn more to technology and away from traditional

  5. Soon hedge fund investors won't bet on a man, they will bet on a machine[more]

    From Forexlive.com: The Wall Street Journal is in the midst of a 17-part series that looks at the rise of quant funds. The AUM and money invested in quant funds still trails traditional asset managers but the gap is closing. What's truly amazing is volume. Quant funds make up 27% of trading vo