Displaying items by tag: hedge funds

(New York)

Hedge fund managers have seen a real decline in their reputations over the last decade. Chronic underperformance and the rise of passive vehicles has led to a high degree of skepticism. Therefore, take their comments with a grain of salt. That said, the hedge fund community is ever more loudly saying a new crisis is on the way. Particularly in Europe, famed managers are saying a repeat of the Crisis is coming. These names include Crispin Odey, Alan Howard, Greg Coffey, and Russell Clark.

FINSUM: There is a lot of doom and gloom out there, but there has been for years (periodically). Everyone was saying the same thing in 2015, and here we are three years later with markets much higher and the economy doing well. That said, we do see some storm clouds brewing.

(New York)

Despite the rise of ETFs over the last few years and the weak performance of hedge funds, on average, one of the astounding things in asset management has been the staying power of the latter. Hedge funds long had a “2% and 20%” fee structure as standard, and while most discount a bit from there nowadays, fees are still very high—hundreds of times low-priced ETFs and mutual funds. Bloomberg explains that a big part of that fee goes into paying the brokers that recommend the funds. The payments go by all sorts of names, such as placement fees, payment for shelf space, and retrocessions, but the fact is they boost costs to investors.

FINSUM: Bloomberg tries to make this look dirty, but the reality is that referral fees are standard in many industries. The big question in this area is where this type of arrangement falls when the SEC debuts its new fiduciary rule?