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Alternative Market Briefing

Paul Tudor’s hedge fund trims fee amidst poor performance, keep investors

Tuesday, May 24, 2016

Komfie Manalo, Opalesque Asia:

Paul Tudor’s $11.6bn hedge fund firm Tudor Investment Corp. announced on Monday it would slash down fees of one of its biggest fund to 2.25% of assets and 25% of profits amidst backlash arising from poor performance, Bloomberg reported.

The move was revealed in a letter to investors released on Monday. Tudor made the decision after the hedge fund was hit by about $1bn withdrawals from clients in the last quarter and following losses in 2016. The fund’s investors have called on Tudor to lower its fees because of this.

Industry observers were quick to react to the move. Erik Gordon, a professor of business and law at the University of Michigan, commented, "A half-percent cut in management fees and 2% cut in the carry won’t make a fund that was losing investors attractive enough to keep them. It’s like having a former slugger who now hits .173 offer to take a pay cut from $10m to $9m."

The report added that the hedge fund is planning to launch a new pool for clients with a minimum investment of $50m that will be charged a reduced fee of 2% of assets and 25% of profits. However, Tudor said it would maintain its fees for the firm’s main fund’s oldest share class at 4% of assets and 23% of profits.


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