The halcyon days when hedge funds’ “2 and 20” fee structure went unchallenged may be over.
The halcyon days when hedge funds’ “2 and 20” fee structure went unchallenged may be over.
The debate over the amount hedge funds charge their clients – famously a 2 per cent cut on assets under management and a 20 per cent cut on returns – is a perennial controversy.
But with hedge funds still flattened by the financial crisis, and huge inflows of new money into alternative strategies anticipated in coming months, pension funds and other large institutional investors find themselves in a position to negotiate lower fees.
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As a survey by Prequin, the investment consultancy, found last week, the average hedge fund is now charging on average 1.63 per cent in annual management fees and 17.2 per cent in performance fees.
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