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Laxman Pai, Opalesque Asia: The new hedge funds pursuing traditional investment strategies charged an average management fee of 1.9%, while the funds pursuing bespoke investment strategies charged an average management fee of .925%, said a study.
The first-ever Seward & Kissel Established Manager Hedge Fund Study of new hedge funds launched within established managers reveals a sharp divergence in the management fees charged by such funds depending on their investment strategies.
The study defines "established-manager funds" as new hedge funds or classes of existing funds overseen by investment managers who have been in business for more than five years and have more than $1 billion in regulatory assets under management.
Among that universe of funds, the study found a roughly even split between those employing traditional strategies and those using bespoke strategies that seize on the current high-interest rate environment, such as income funds, defensive funds, and inflection funds.
The two types of funds diverged not only in management fees but also in their incentive allocations. Traditional-strategy funds consistently set their incentive allocation at 20%, while bespoke strategies had an average rate of 16.5%. About one-third of bespoke-strategy funds used a "1 or 20" compensation structure, paying them the greater of a 1% management fee or 20% incentive allocation.
This first edition of the Seward & Kissel study also said t...................... To view our full article Click here
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