FYI: The standard “2 and 20” hedge fund fee model is now used by only 30% of hedge funds, according to an industry expert.
Keith Seibert, managing director at CM Capital Advisors, the investment firm that invests in hedge funds, says the 2 and 20 fee structure — where hedge funds are paid a flat rate 2% management fee as well as a 20% performance fee — is declining. Hedge funds are cutting their fees in response to mediocre performance.
The $3 trillion hedge fund industry was built on a promise of high fees for great investment skill, enabling investors to make money whether markets were kind or cruel. But since the financial crisis, hedge funds have failed dismally to beat the stock market. The whole-industry index from HFRI, a data provider, has risen 64.3% in the past 10 years, while the MSCI World has advanced 172.9% in dollar terms.
Regards,
Ted
https://www.barrons.com/articles/only-a-third-of-hedge-funds-charge-2-and-20-fees-says-expert-1541851200
