New York (HedgeCo.net) – The old standard in the hedge fund industry used to be “2 and 20” which stood for a 2% management fee and a 20% performance fee, but those standards might be a little outdated at this point.

The Financial Times recently featured an article on the subject and they cited Eurekahedge as the source, stating that the average performance fee is now down to 14.7% which is sharply lower than the 17.1% average fee in 2014. The article also pointed out that the average management fee has risen over the last four years and is now up to 1.7%.

The decline in fees may have come about for a number of reasons. First, with the industry as a whole lagging the overall market in recent years, it is hard to justify charging higher fees unless the fund has a long track record of success. Secondly, the introduction of other alternative investments such as alternative mutual funds and ETFs as well as alternative investment platforms have made alternative investing much more accessible and the fees are considerably lower than the traditional hedge fund.

Rick Pendergraft
Research Analyst
HedgeCoVest