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Alternative Market Briefing

How to command the hedge fund fees you want

Monday, April 10, 2017

amb
Karsten Schroeder
Benedicte Gravrand, Opalesque Geneva:

The never-ending question of hedge fund fees was discussed at the recent Opalesque Zurich Roundtable, and it was agreed that only genuine talent will end up on top of the fee chain.

According to Karsten Schroeder, head of Amplitude Capital, a short term systematic specialist, one has to provide something to the client in order to justify fees. But bearing in mind hedge fund operations have become more complex and more expensive, this poses a challenge for managers as well as investors, "because if investors continue to push fees beyond reason then it will eventually backfire."

"I have to say that investors are all aware of that issue, and also aware of what I (call) 'the conundrum': They want niche strategies and idiosyncratic returns, but on the other hand they want the big brand name manager with a lot of size, but these two things often don't go together," he explained. "The two sides are actually a contradiction in themselves, and I think that's really the issue they face. So investors don't want you to become too big to dilute their strategies too much, but then they also want to squeeze the fees, but that in a way forces the managers to collect assets." So this situation calls for a healthy compromise.

If a manager ......................

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