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From Komfie Manalo, Opalesque Asia:
Hedge funds executives who attended the first 2009 Opalesque Roundtable, held in Zurich, Switzerland on 26-Feb, discussed the sensitive issue of the 2% fixed fee and the 20% performance fee. One panelist questioned the fees’ fairness, particularly in this time of recession, while many said that investors were more interested in performance than in fees charged against them.
It was Dr. Christian Raubach, managing partner at Wegelin & Co. Private Bankers, who first raised the question of adjusting fees, particularly for long-short equity funds. “I am not really sure if a 2% fixed fee and 20% performance fee with a hurdle of zero is a fair pricing strategy for a long-short equity fund, where one mixes lots of beta with a few of one’s own ideas in the hope that they are more often right than wrong,” he said.
But Uwe Eberle, head of Institutional Sales at Man Investments, pointed out that people do not care if they pay a little bit more just as long as they are with the right fund of funds. However, funds who fail to deliver should adjust their fees.
“I am not sure if pricing is actually the big issue out there, but rather that people want to have the best
provider. I think the issue is much more with funds who didn’t deliver what the expectations were.
They need to significantly adjust, or there is no place out there for them.” Ewerle said.
His view was supported by Jim ...................... To view our full article Click here
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