A recent study on the effect of the fees that hedge funds charge, \u00c3\u00a2\u00e2\u201a\u00ac\u00c5\u201cPortfolio Efficiency With Performance Fees,\u00c3\u00a2\u00e2\u201a\u00ac\u00c2\u009d was conducted by Mark Kritzman, president and chief executive of Windham Capital Management, a Boston-based money management firm.<\/p>\n
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Mr. Kritzman\u00c3\u00a2\u00e2\u201a\u00ac\u00e2\u201e\u00a2s article shows that hedge funds\u00c3\u00a2\u00e2\u201a\u00ac\u00e2\u201e\u00a2 high fees make it unlikely that investors will improve their long-term performance by putting money into hedge funds. Focusing on the standard fee arrangement in the industry, known as \u00c3\u00a2\u00e2\u201a\u00ac\u00c5\u201c2 and 20\u00c3\u00a2\u00e2\u201a\u00ac\u00c2\u00b3, which is to charge 2% of assets under management and 20% of profits above a predetermined benchmark, Mr Kritzman found that the combined impact of such fees is so high as to greatly reduce the attractiveness of hedge funds.<\/p>\n
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In an interview with the New York Times, Mr Kritzman said the fees\u00c3\u00a2\u00e2\u201a\u00ac\u00e2\u201e\u00a2 effect on the portfolio was so sizable because of the \u00c3\u00a2\u00e2\u201a\u00ac\u00c5\u201casymmetry penalty\u00c3\u00a2\u00e2\u201a\u00ac\u00c2\u009d resulting from the 20% cut of profits that the hedge funds earn. The funds do not share in investor losses, but they reap a large share of the profits.<\/p>\n
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The study was similarly disparaging about funds of hedge funds, saying he found it difficult to justify any allocation to funds of hedge funds, because they earn fees above and beyond those earned by the hedge funds in which they invest, typically 1% of funds under management and 10% of profits above a benchmark. The bottom line, Mr. Kritzman told the New York Times, is this: \u00c3\u00a2\u00e2\u201a\u00ac\u00c5\u201cBecause of fees, the optimal allocation to a group of hedge funds is a lot lower than you might think it should be.\u00c3\u00a2\u00e2\u201a\u00ac\u00c2\u009d<\/p>\n
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Alex Akesson HedgeCo.Net is a premier hedge fund database and community for qualified and accredited investors only. Membership on www.hedgeco.net<\/a> is FREE and EASY. We also offer FREE LISTINGS for Hedge Funds! <\/p>\n Be sure to check out our sister sites. www.hedgefundlounge.com<\/a>, www.hedgefundtools.com,<\/a><\/strong> and www.hedgefundemployment.com.<\/strong><\/a> <\/p>\n<\/p><\/div>\n<\/div>\n <\/p>\n","protected":false},"excerpt":{"rendered":" A recent study on the effect of the fees that hedge funds charge, \u00c3\u00a2\u00e2\u201a\u00ac\u00c5\u201cPortfolio Efficiency With Performance Fees,\u00c3\u00a2\u00e2\u201a\u00ac\u00c2\u009d was conducted by Mark Kritzman, president and chief executive of Windham Capital Management, a Boston-based money management firm. Mr. Kritzman\u00c3\u00a2\u00e2\u201a\u00ac\u00e2\u201e\u00a2s article shows […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[3],"tags":[],"class_list":["post-5758","post","type-post","status-publish","format-standard","hentry","category-hedgeco-news"],"_links":{"self":[{"href":"https:\/\/hedgeco.net\/news\/wp-json\/wp\/v2\/posts\/5758","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/hedgeco.net\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/hedgeco.net\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/hedgeco.net\/news\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/hedgeco.net\/news\/wp-json\/wp\/v2\/comments?post=5758"}],"version-history":[{"count":0,"href":"https:\/\/hedgeco.net\/news\/wp-json\/wp\/v2\/posts\/5758\/revisions"}],"wp:attachment":[{"href":"https:\/\/hedgeco.net\/news\/wp-json\/wp\/v2\/media?parent=5758"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/hedgeco.net\/news\/wp-json\/wp\/v2\/categories?post=5758"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/hedgeco.net\/news\/wp-json\/wp\/v2\/tags?post=5758"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}
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