Ainslee's Maverick Capital Unveils 0% Performance Fee Structure

Oct 20 2017 | 10:17pm ET

Lee Ainslie’s Maverick Capital hedge fund has become the latest large alternative manager to slash fees to some investors amid disappointing performance in its main fund.  

Maverick has offered to forego performance fees to some investors, according to the Wall Street Journal, as its flagship hedge fund is down -2% for the year to date through September after an approximately -10% drawdown last year. The catch? The offer entails a new “recovery” share class that allows existing investors to add capital to the fund in return for a 0% performance fee, and will “expire” when the client’s high water mark is reached. 

Management fees, apparently, will still be charged. Maverick’s typical fee structure has been 1.75% management and 17.5% performance, the Journal wrote, and Anslie is said to have described the decision as a way to thank clients for their loyalty. 

Ainslie’s concerns about high equity market valuations has reportedly resulted in fairly defensive portfolio positioning, meaning his flagship hedge fund has largely missed out on this year’s tremendous equity market rally. 

Maverick Capital was founded in 1993 by Ainslie following a stint at Julian Robertson’s Tiger Management, making him one of the original “tiger cubs”. The firm manages more than $10 billion and has reportedly experienced net inflows both last year and so far this year, despite the negative performance.

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