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By Benedicte Gravrand, Opalesque London:
There is electricity in the air when the fund management industry talks about fees - especially the alternatives part of it. 2008 seems to have taken the veil off for all to see the unsightly signs of poor asset protection and liquidity problems. And also, what seems to be some liberty-taking according to some.
Investors are now demanding more transparency, more control, better liquidity terms, and more flexible fees. The industry has so far readily given better transparency, set up managed accounts and platforms, improved liquidity terms and matches... but there is a conspicuous division in the ranks on the subject of fees.
Will it be a case of "Adapt or die" or "Resistance at all costs"?
Some managers are arguing that high fees are the price to pay for high performance. This was supported by a recent study by Chicago-based data provider Hedge Fund Research, which reportedly found that, "with one significant exception, the more expensive funds generated higher returns for their investors. The returns were higher even after the fees had been taken into account" (Source).
"Fees have a direct impact on performance, so those with high fees must have high targets and achieve them," James Hughes, head at HSBC GAM in Hong Kong, told AsianInvestor.com.
A lot of...................... To view our full article Click here
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