Guest Contributor

Annus Horribilis For Hedge Funds Illustrates Benefits Of Performance-Based Fees

Oct 2 2008 | 7:06am ET

By Christopher Holt -- Cynics often describe hedge funds not as a unique asset class or investment strategy, but as a unique “fee structure.“ To some extent, they are correct.

After all, mutual funds now use hedge fund strategies (long/short, 130/30 etc.) and yet we still call them mutual funds. Conversely, many hedge funds pursue high-beta long bias (a.k.a. mutual fund) strategies, yet we still refer to them as hedge funds.  And indeed, one of the main regulatory differences between the two types of funds is the ability to charge a performance fee.

Hedge fund fees are generally viewed by the media with a jaundiced eye. Many people have expressed frustration that hedge fund fees don’t seem to budge -- even as hedge funds have been producing lackluster absolute returns.

Take 2008 for example. A recent study by Eurekahedge recently found that 90% of hedge funds are currently below their hurdle rates or high water marks and are therefore at risk of earning no performance fee this year. And that was only as of July 31. Continue Reading Article On AllAboutAlpha


In Depth

'Smart Beta' Funds In Regulators' Sights, Hedgies May Be Next

Mar 26 2015 | 11:11am ET

Funds that mimic strategies used by active managers for a fraction of the cost could...

Lifestyle

Study: Both Marriage and Divorce Lead to Negative Hedge Fund Performance

Mar 25 2015 | 6:51pm ET

Trouble at home leads to trouble in the market for fund managers, according to researchers...

Guest Contributor

Concerned About Your HFT Exposure? Hedge It!

Mar 26 2015 | 1:06pm ET

High-frequency trading has been a persistent storyline for several years. The trading...

 

Sponsored Content

    Mar 9 2015 | 6:35am ET

    Kelly RodriquesKelly RodriquesAs more investors look to diversify, many are beginning to use retirement funds to invest in alternative assets such as private equity and real estate. Kelly Rodriques, CEO & President of PENSCO Trust Company, explains how companies can connect with those looking to use their retirement accounts in a different way. Read more…

Editor's Note