Hedge Fund Costs On The Rise

Dec 10 2012 | 5:38am ET

Running a hedge fund is getting expensive, and clients are feeling the pinch.

Most North American hedge funds said that costs have increased this year, and most of them are passing those costs on to investors, according to a new Ernst & Young survey. And that's not likely to make those investors happy, the survey shows.

Almost 60% of hedge funds said their costs have increased over the past year. And "68% of funds passed along these increased costs—up from only 34% in 2011," E&Y's Joseph Micallef said.

"There will continue to be a greater push and pull on this issue of cost allocation for the foreseeable future as investors increasingly show less appetite for costs to be charged to the fund that they did a year ago," Micallef continued. "We don't see this trend changing unless funds greatly improve investment performance returns."


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