Wednesday, 22 October 2014
Last updated 21 min ago
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."
Sep 22 2014 | 4:15pm ET
"I tell people that everybody likes good news and so if you have good performance that’s wonderful,” explains Mike McKitish of Peddie School's endowment, “but it’s the people that want to talk about the bad news or where they drifted and how they came back and how they stayed to their discipline…” that he wants to hear from. Read more…
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