Citadel Mulls Fee Cut, Easier Redemptions

Sep 21 2010 | 8:52am ET

Citadel Investment Group may cut its fees and ease its redemption terms in an effort to attract investors to its flagship hedge funds.

The $11 billion Chicago-based firm does not charge a set management fee on its Kensington and Wellington funds, instead passing along all of its expenses, which have amounted to as much as 8% of assets. Generally, the fee amounts to between 4% and 6%, some three times the industry average.

Those fees may soon come in closer to that average, with Citadel mulling a fee cut. The firm, which suspended redemptions in 2008 after the funds lost 55%, may also ease its withdrawal policies. The funds currently feature quarterly redemptions, but some investors still face long lockups.

The funds have returned about 4% this year. They still must rise another 30% before they have recouped their losses, despite returning 62% last year.


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