A Note on Hedge Fund Fees: the Best is Yet to Come
Jul 9th, 2008 | Filed under: Investment Management FeesAngelo Calvello has been around the alpha-centric investing world longer than almost anyone. In fact according to our research, he actually coined the term “alpha-centric” investing. In a guest posting today, he applies this thinking to hedge fund fees. And what he concludes will surely surprise many.
Special to AllAboutAlpha.com by: Angelo A. Calvello, Ph.D.
I recently attended a conference on 130/30 strategies. The discussion eventually and inevitably drifted to the well worn but poorly understood topic of hedge fund fees and more specifically the inevitable compression of those charges.
It is a debate founded on the belief that hedge fund fees are simply too high, although it is not clear what yardstick is being used to support this conclusions. Hedge fund fees could be compared to those charged by traditional long-only managers, but this would assume that fees charged for ‘active’ long only management fairly represent the value added by these strategies. This, of course, is questionable.
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