Wednesday, 23 July 2014
Last updated 6 hours ago
Sep 9 2013 | 11:24am ET
Hedge fund fees are continuing to decline, beset by a variety of pressures that are making the famed '2 and 20' a thing of the past.
The average hedge fund charges 1.6% for management and 18% for performance, The Wall Street Journal reports. Goldman Sachs says investor levies are somewhat higher, at 1.65% and 18.3% as of last year, while Hedge Fund Research put the figures at 1.55% and 18.39% in the first quarter.
Equity hedge funds have had to cut fees most aggressively, with the average management fee at about 1.5%, according to Seward & Kissel. Commodity funds have also seen their average fees drop, while bond funds haven't felt as much pressure.
The reason may be simple: Stock and commodity funds haven't done especially well recently, while some debt funds employ complex—and expensive—strategies.
But underperformance isn't the only thing weighing on hedge fund fees. Increasing competition for smaller allocations among small and mid-sized hedge funds is fueling something of a fee-cutting war. More hedge funds are establishing hurdles they must clear before charging performance fees, while others are acquiescing to clawbacks.
Jul 8 2014 | 10:48am ET
The surge in derivatives regulation is among the most complex challenges facing the financial services industry today. Northern Trust’s Joshua Satten recently spoke with FINalternatives to share insights into the challenges presented by new regulation and explore how the industry is responding. Read more…