Englander Blasts 'Arbitrary' Management Fees

Nov 10 2010 | 11:38am ET

Millennium Management founder Israel Englander took the opportunity of a rare public appearance to take his fellow hedge fund managers to task on management fees.

Two percent is "an arbitrarily pre-established" management fee that has hurt the hedge fund industry's entrepreneurial instincts, Englander told the Terrappin Hedge 2010 conference in London yesterday.

"The real problem with the two and 20 structure was that the manager's incentives changed," Englander said. In particular, the incentive to increase assets under management pushed hedge funds to expand outside of their competency to increase management fee revenue.

"Name me another industry in the world that has a management fee like this," he challenged. "If a manager has skin in the game, why would he create larger costs that are unnecessary?"

"For 20 years, one thing has not changed, especially not at Millennium," Englander boasted. "We get paid strictly on performance, not on promises."


In Depth

Debunking Conventional Investment Wisdom

Feb 8 2017 | 3:22pm ET

Due diligence in the hedge fund world has long involved some combination of the...

Lifestyle

'Tis the Season: Wall Street Holiday Parties Back In Fashion

Dec 22 2016 | 9:23pm ET

Spending on Wall Street holiday parties has largely returned to pre-2008 levels...

Guest Contributor

The Future of Private Equity: New Opportunities, New Challenges

Feb 3 2017 | 6:41pm ET

The private equity industry’s astonishing rebound since the financial crisis has...

 

From the current issue of