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Traditional ‘2 and 20’ fees are becoming outdated as managers seek to keep investors happy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The willingness to negotiate on fees shows how the longstanding 2 and 20 formula for hedge fund fees is becoming outdated.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 to acquiesce to investor pressure and cut how much they charge.

Andrew Beer, chief executive of Beachhead Capital, which markets products that rival hedge fund offerings, says the average fee is now about 1.65 per cent in management fees and 18 per cent in incentive fees. For new fund launches, it is now 1.49 per cent and 17.5 per cent, according to Hedge Fund Research.

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January 3, 2017