Tue, Feb 25, 2020
A A A
Welcome Guest
Free Trial RSS
Get FREE trial access to our award winning publications
Alternative Market Briefing

Other Voices: Evolution of shrinking hedge fund fees - what do investors and managers need to know?

Wednesday, February 12, 2020

By Don Steinbrugge, Founder and CEO, Agecroft Partners (DonSteinbrugge@agecroftpartners.com):

Hedge funds fees remain under extreme pressure across the industry. This strong trend is driven by declining return expectations from investors, increased competition across the industry, and an increasing share of industry assets controlled by large institutional investors. 

Back in 2009, most hedge fund investors took meetings with hedge fund managers they thought had the ability to generate mid-teen returns. Today, historically low interest rates, tight credit spreads and high equity valuations have largely dampened expected returns to high single digits. As a result, many investors believe that the fees historically charged by hedge funds now represent too large a percentage of their gross performance. A recent Eurekahedge survey on North American based hedge funds noted that the average management fee has declined to 1.26% and the average performance fee has declined to 14.81%.   The results of this survey raise two very important questions:

1.      If these survey results accurately reflect the average fees, are these the fees paid by most hedge fund investors?   2.      How can investors take advantage of changing fee structures to generate better investment results?

Does the average investor pay the average fee?

Twenty years ago, all investors generally paid the same fee, regardless of allocati......................

To view our full article Click here

Today's Exclusives Today's Other Voices More Exclusives
Previous Opalesque Exclusives                                  
More Other Voices
Previous Other Voices                                               
Access Alternative Market Briefing

 



  • Top Forwarded
  • Top Tracked
  • Top Searched
  1. PE/VC: Venture debt: Is it a loan? Is it equity? Is it an pportunity?, PE, VC investments in India hit all-time high in 2019[more]

    Venture debt: Is it a loan? Is it equity? Is it an pportunity? From Forbes: Venture Capital is usually the default option for fast-growth startups looking for a cash injection, thanks to our willingness to take risks in return for equity, and with no need to pay anything back - at least

  2. Bruce Berkowitz is back!, Coatue's new quant fund lost money in the fourth quarter[more]

    Bruce Berkowitz is back! From Institutional Investor: Famed value investor Bruce Berkowitz has hit hard times over the past decade, with big bets on losers like Eddie Lampert's Sears Holdings. In fact, over the past 10 years, his Fairholme Fund's annualized return is only 4.89 percent -

  3. Other Voices: Are all ESG Indexes as green as you want them to be?[more]

    From Beyond Investing: When Laurence Fink, chief executive of BlackRock, with nearly US$7 trillion under management, vows to put sustainability at the core of the firm's new investment approach, markets and investors sit up and liste

  4. Legal: Philip Falcone sued over alleged $65.8m default, Warhol painting[more]

    From Bloomberg: Former Harbinger Capital hedge fund manager Philip Falcone was accused in a New York lawsuit of defaulting on $65.8 million in loans and violating the terms of lending agreements by selling two paintings used as collateral, including one by Andy Warhol. Melody Business Finance LL

  5. U.S.: Second round of layoffs to hit TIAA's shuttered OCIO business this week, Capital buffers edged lower at systemic US banks in 2019[more]

    Second round of layoffs to hit TIAA's shuttered OCIO business this week From Institutional Investor: A second round of layoffs in TIAA's outsourced chief investment officer business is slated to take place this week, according to one former staffer. TIAA announced in November that it wa