Compliance Takes Big Bite Out Of Hedge Funds

Oct 18 2013 | 12:57pm ET

A new study puts a price on the rising cost of hedge-fund compliance.

The average hedge fund spends between 5% and 10% of its operating costs on compliance, according to KPMG International, the Managed Funds Assocition and the Alternative Investment Management Association. Hedge-fund compliance costs have been rising in the face of a raft of new regulations in both the U.S. and Europe.

"It's absolutely raising the barriers to entry," KPMG's Robert Mirsky said. "I don't think the industry is opposed to sensible regulation, but you have to be very careful that you don't layer on so much that it stifles the ability to innovate and the ability to the industry to grow."

Hedge funds with more than $5 billion in assets paid an average of $14 million on compliance. Those with between $1 billion and $5 billion average $6 million, and those with less than $1 billion $700,000.


In Depth

Q&A: Old Hill's Stone On Private Debt, P2P And Credit Bubbles

Jun 6 2017 | 7:52pm ET

While institutional capital continues to flow into the broader private debt sector...

Lifestyle

CFA Institute To Add Computer Science To Exam Curriculum

May 24 2017 | 9:25pm ET

Starting in 2019, financial industry executives sitting for the coveted Chartered...

Guest Contributor

Steinbrugge: Asia-Focused Hedge Funds Offer Great Opportunities

Jun 23 2017 | 3:33pm ET

Emerging market strategies have outperformed their developed-market peers for five...

 
Error

From the current issue of