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Alternative Market Briefing

AIMA survey: Hedge fund managers put more effort in aligning interests with investors

Monday, September 12, 2016

Benedicte Gravrand, Opalesque Geneva:

Alternative asset managers are adopting old ways and finding news ways to attract investors and show better alignment of interests, through the use of high water marks, hurdle rates, sliding fee scale, claw-backs, longer lock-ups, transparency, and skin-in-the-game for example.

This is according to a survey by the Alternative Investment Management Association (AIMA). The study, titled "In Concert", interviewed 120 alternative investment fund management firms globally representing about $500bn in assets under management (AuM).

According to the findings, a third of managers now charge performance fees above a hurdle rate, such as a fixed percentage or an index-based benchmark. For example, if a fund sets a hurdle of 5% and returns 15%, performance fees would only apply to the 10% above the hurdle.

" Source: www.aima.org

Three quarters offer or are thinking about offering a sliding fee scale, whereby management fees are reduced as the fund raises assets above particular thresholds. That especially applies to emerging and start-up managers. For example, a fund might ......................

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