Surveys suggest that certain conspicuous ongoing trends will continue. For example, the classic 20 + 2 fee structure will continue to crumble, replaced by "customized" structures. A full 91% of the small hedge fund managers who filled out a survey agreed with this. A mere 76% of large hedge fund managers did likewise.
Investment Management Fees
A proposed new set of principles, designed to encourage investors in the alt-investment industry in their discussions with their managements, encourages skepticism both about side-pocketed assets and about other investors' sweetheart deals (i.e. "side letters.")
Should investors, especially institutional investors, push back (or push back harder than they have so far) against the fee structure preferred by those whom they pay to manage their money? And is the recent announcement from CalPERS such a push?
Guest columnist Rick Ehrhart looks at hedge fund incentive compensation.
Andrew Beer, guest columnist, takes another look at the never-ending debate about hedge fund fees. Do they or don't they justify themselves?
Why convert a hedge fund to a mutual fund instead of establishing a stand-alone vehicle available to retail investors that could invest alongside the existing hedge fund?
In June 2010, pursuant to an order of that BVI court, the court-appointed liquidators of a Madoff feeder fund in liquidation in BVI petitioned the bankruptcy court in the Southern District of New York to recognize those proceedings as the foreign main proceeding under Chapter 15.
Guest columnist Andrew Beer looks at fee reduction as an "alpha generator."
Guest columnist Charles Skorina looks at pension funds and fees and finds....
Citi Prime's report has in mind specifically the situation of hedge fund firms that are interested in expanding into the public-offerings space. They have to keep in mind that they'll have a completely different investing audience from that of the QIPs and institutions to which they are accustomed.
Guest columnist Diane Harrison looks at the future of hedge fund fees.
Charles Skorina speaks with Curtis Loftis, Treasurer of South Carolina about investment fees.
The question in 2012 is not whether hedge funds (and other alternative investment vehicles) can attract pension funds, but how they should go about it. Alternatives managers will benefit most from the heightened interest of pension funds if they address the continuing concerns of their pension fund colleagues. For example, pension fund managers are well aware that investment in exotic and illiquid products is something hedge funds do, and they know that these products can help make a quick exit impossible.
Data on the endowments of institutions of higher learning shows a significant spread between the performance of the largest endowments and the lagging performance of the smaller. The return that endowments received on their use of alternative strategies, too, depends in part upon the size of the endowment doing the investing. Endowments under $25 million in assets under management made only 9.5 percent on this asset class in FY 2011, while those with more than $1 billion in AUM made a 16.9 percent return hunting in the same jungles.
There are high hopes that the new UCITS framework that took effect in July could herald rationalisation amongst Europe’s regulated hedge funds. While tax factors could slow down the process, UCITS has plenty of other growth drivers besides cost savings.
Fees for alternative investments, particularly for private equity, are a long-standing issue that likely will never be resolved, but investors and managers alike keep trying, according to a recent survey by Preqin.
Institutions continue to favor alternatives as they remain committed to diversifying away from traditional asset classes. The problem, according to Towers Watson's latest survey, is that they aren't necessarily sold on hedge funds, and they certainly aren't thrilled with the price point.
Clients, according to a surprising new report, aren't too keen on alpha at the moment.
Everyone is talking about how institutional investors are beating up hedge fund managers on fees these days. But it seems the empirical evidence suggests otherwise. In fact, dropping fees may be the worst thing a hedge fund can do after a rough patch.
A new academic paper suggests managers open and close their funds to new investments to keep performance up - and to keep fees flowing in. We wonder whether hedge fund champion John Paulson would agree.
Wondering how much of the pie really goes to the manager? Read on.
Think hedge funds face an uphill battle on fees? It turns out that mutual funds may actually have it worse.Sep 2nd, 2010 | Filed under: Academic Research, Investment Management Fees, Today's Post
Hedge funds are used to taking their lumps when it comes to fees. But at least one noted academic says the mutual fund industry actually has a far bigger problem on its hands.
Report: Median performance fee earned by UK mutual funds that have one is, well, not really an issueAug 29th, 2010 | Filed under: Hedge Fund Regulation, Investment Management Fees, Today's Post
A new report by Lipper examines the early impacts of the UK's endorsement of performance fees for mutual funds.
Contrary to popular opinion, research shows that HF managers won’t necessarily go “all-in” to win bigAug 19th, 2010 | Filed under: Academic Research, Investment Management Fees, Today's Post
Apparently, executives outside of Hedgistan could benefit from mimicking how hedge fund managers get compensated.
Performance fee arrangements can be a dog's breakfast.
The debate over whether hedge funds are worthy of the management and performance fee structures they charge will likely live on in perpetuity, but a recent in-the-flesh pow-wow on the topic has raised some interesting angles on whether hedge funds are worth the price.
Like the ubiquitous volcanic ash cloud story, the hedge fund fee story kind of floats around for a while, then reemerges without warning to steal the headlines.
Sure, pension funds always want to pay lower investment fees. But a new survey reveals that many feel they are getting more value for money now than last year.
An academic study finds that the presence of a high water mark can induce the kind of loyalty usually forced upon investors with redemption gates.
Still more evidence that hedge fund managers aren't going to climb back above their high water marks for the foreseeable future. The question is how much longer managers will be willing to tough it out.
Investors will still cough up for alpha if they think they can get it, but aren't going to be as tolerant paying for beta anymore.
According to experts, a case currently before the US Supreme Court will "define the contours of a mutual fund adviser’s fiduciary duty with regard to compensation." Will it impact hedge funds too?
The debate over hedge fund fees is almost as old as hedge funds themselves. It remains to be seen whether the latest market collapse actually leads to a new pervasive fee structure.
Can some investors be "fooled" into buying new and unproven private equity funds?
Now the performance fee holiday doesn't have to end just because you sold your losing hedge funds.
Although newly emboldened investors seem to be pushing fees below the mythical "2 and 20" level, research has shown that fee pressure has been at work in the hedge fund industry for some time.
Do premia and discounts on closed end hedge funds actually reflect anything about the funds themselves or do they just a response to exogenous factors?
Retail mutual funds have been researched in every conceivable way. But we were surprised to learn that institutional mutual funds haven't undergone the same level of scrutiny. Until this year.
If hedge funds are supposed to be so unique, then why do most closed-end HFs sell at a discount or premium to NAV at the same time?
Like water in a bathtub, assets seem to slosh in and out of the hedge fund industry frequently. Unfortunately for investors, this can scrub under-performers clean of their requirement to provide a performance fee holiday.
Most calls for hedge fund fees to change have fallen on deaf ears. But here's one that we think might actually fly.