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From Kirsten Bischoff, Opalesque New York:

Discussions surrounding hedge fund fees seem to rear up every few months these days. Typically, they are prompted by poor hedge fund performance, but as most hedge funds have made gains this year, and many proved their alpha capturing abilities, the fee discussion seems a bit out of place. Perhaps it is signaling a permanent shift brought on by both a tight asset raising environment, and the power of institutional investors flexing their muscle as they become a larger presence as hedge fund investors.

Management fees and the escalating cost of fund infrastructure It is easy to do the quick calculations and sound off in amazement at the numbers the largest hedge funds bring in with 2% management fees. However, for the small and mid-sized funds, and most importantly for launching funds, the cost of starting a hedge fund has never before been higher.

Perhaps one of the most telltale signs of this shift in how vital managers consider their management fees is that no longer do they boast about their management fees in such blithe terms as they have in the past (i.e. “That’s $5m just to turn on the lights”).

Infrastructure requirements today bring overhead cost requirements that previously did not exist back in the days when an individual could feasibly raise cash off a track record driven only by a Bloomberg terminal for trading and Excel for fund accounting.

“Managers need to reset their......................

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