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New Managers March 2015

PERSPECTIVES: Views and perspectives relevant to emerging fund managers

 

US based hedge fund managers implement new fee structures

A growing number of new hedge funds offered by new U.S.-based managers have implemented management fee structures that decrease as fund assets grow, according to The Seward &Kissel New Hedge Fund Study. Several findings within the study signaled hedge fund managers' heightened sensitivity to the needs of investors, and the related imperative to reign in costs. Of all funds studied, 19% adopted a tiered approach to management fees, stepping down to lower rates as assets in the fund surpass pre-established benchmarks...

Launch sizes continue to tick upward as well. Survey data shows that at least 40% of new fund launches in 2014 were $75 million or above, and most had seed capital. No fund within the study chose to go down the path of engaging in general solicitations and advertising as is now permitted under new Securities Act Rule as part of the JOBS Act Rule as part of the JOBS Act.

(Full article from B. McCann here).

The study says that 73% of hedge funds launched by new U.S. managers last year had equity or equity-related strategies.

Other figures from the study suggest that in 2014, managers were very focused on raising day one capital and, consequently, offered founders class fee discounts a high percentage of the time. The percentage of all funds that obtained some form of founders capital increased sharply, from 43% in 2013 to 65% in 2014, with 75% of equity funds and only 43% of non-equity funds offering such classes. When hedge fund general partners should outsource family office services

"Many hedge funds launch with most of the start-up capital coming from immediate family – or even the manager alone. Usuall......................

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This article was published in Opalesque's New Managers a top-down monthly analysis, news and research publication on the global emerging manager space.
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