Bridgewater Vets Forego Performance Fees At New Hedge Fund

Aug 6 2014 | 4:16pm ET

Hedge fund returns are looking more and more like those available in traditional investment funds and index funds. One new firm thinks that means they should charge more like those asset classes, too.

A pair of Bridgewater Associates veterans last year launched a new hedge fund, Convoy Investments, that charges a below-average management fee—and no performance fee at all. That fee structure makes it rare, if not unique, among hedge funds, some of which forego a management fee, but few if any of which don’t charge double-digit performance fees.

“Many hedge funds simply repackage or lever cheap benchmark indices and sell it as expensive outperformance,” Convoy co-founder Robert Wu, a former Bridgewater software engineer, told Bloomberg News. “While true uncorrelated management is more valuable than ever, investors need to make sure they are getting what they pay for.”

What Convoy investors would be paying for is a 10% return this year and 14% since inception. The firm aims to return 10% per year.

Wu and his co-founder, Howard Wang, a former analyst at Bridgewater’s All Weather strategy, are currently managing only internal and friends-and-family capital. They hope to garner up to $200 million when they open Convoy to outside investors.

Convoy isn’t only charging low fees—it’s waiving them altogether for foundations and underfunded pensions. Up to a quarter of the firm’s money will be managed pro bono.


In Depth

Q&A: Portfolio Advisors' Brian Murphy On The Advantages of A Private Markets Platform

Jan 2 2018 | 11:05am ET

Most private markets firms reference their platforms as a source of competitive...

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: The Top Hedge Fund Industry Trends for 2018

Jan 2 2018 | 12:22pm ET

Each year, Don Steinbrugge’s Agecroft Partners compiles the insights gained...

 

FINalternatives Trending

From the current issue of