Fees

Hedge funds fees take a trim

Link to FT article with quote from Andrew Beer Traditional ‘2 and 20’ fees are becoming outdated as managers seek to keep investors happy by: Lindsay Fortado — December 22, 2016 Excerpt: The willingness to negotiate on fees shows how the longstanding 2 and 20 formula for hedge fund fees is becoming outdated. While there has always been pressure on hedge fund managers to reduce their fees, some of the highest in finance, lacklustre performance this year by several of the biggest names in the industry has forced funds who once billed some of the highest rates in the industry …

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Financial Times: The Hedge Fund Fee Structure Consumes 80% of Alpha

Investors bear the risks and managers reap the rewards, says Beachhead’s Andrew Beer. The average hedge fund earns 1.67 per cent in management fees and is paid 18 per cent of investment profits annually. Over the past ten years, investors paid away half of pre-fee returns. Even more troubling is the fact that fees consumed 80 per cent of alpha, the active return on an investment. Yes, the industry still generates a lot of alpha, but it goes to the managers, not investors. How did we end up in a world where investors bear the risks and managers reap the …

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