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Laxman Pai, Opalesque Asia for New Managers: Emerging hedge funds may need to adopt more innovative fee structures and reinforce marketing efforts to raise more capital, said a research report.
A research from the industry trade body Alternative Investment Management Association (AIMA) and alternative prime broker GPP said emerging hedge fund managers were not yielding to fee pressure but could become more flexible.
The emerging managers, those with less than $500m of AuM, are less flexible on management fees than their larger peers, although at the sub $100m AuM level, there is greater flexibility on fees, said the second edition of the emerging manager research report from GPP and AIMA - 'Making it Big'.
The report finds 20% of emerging managers charge 2%+, versus just 8% of larger managers charging the same fee, perhaps reflecting a greater reliance on this income to support the basic running of their business.
The research found the emerging hedge fund industry is robust and healthy, with the amount at which firms can breakeven static at $85m of AuM ($86m in 2017). But despite 94% of sub-$100m managers currently raising capital, more than a quarter (27%) spend none of their management fee on marketing.
It said that the percentage of hedge funds charging a management fee of 2% or more has risen from 14% in 2017 to 22% in 2018. The proportion charging a performance ...................... To view our full article Click here
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