Hedge Fund, major changes. Wow.

D

Don Bright

So, according to Bloomberg and Goldman Sachs the new fee structure is a huge difference.

Old way, 2% management fee - now zero.

Old 20% of all profits - now.... fund must pay 10% to investors first before GS gets anything, and then GS gets 10% of profits on the rest of whatever profits there might be.

This is quite a change to attract money, IMO. This will change the whole idea about wanting to run a hedge fund. I'm not saying every fund will have to change (obviously they won't have t0), but sometimes Goldman does lead the way.

I'm also not saying that this means more downside for these funds, but I am saying that it shows a much stronger desire to attract money.

Don
 
Quote from Don Bright:
I'm also not saying that this means more downside for these funds, but I am saying that it shows a much stronger desire to attract money.
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Or it shows a strong desire to keep people from asking for immediate redemptions.
 
Quote from makloda:

Or it shows a strong desire to keep people from asking for immediate redemptions.
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Good point....and, it's really going to make it harder for anyone wanting to start a small hedge fund, no incentive on either side.

Don
 
When are they moving headquarters to Bentonville, AR?

Discount hedge fund...they should REALLY be ashamed of themselves!

:D

PS - They won't be retaining any talent on a structure like that!
 
Quote from makloda:

Or it shows a strong desire to keep people from asking for immediate redemptions.
More...

Are you refering to the way Sentimel is hindering their clients from redemption ?Read this => From www.dealbreaker.com

Google cache has preserved their old Frequently Asked Questions Page with some awkward answers that have turned out not to be entirely accurate :

How is Sentinel different from a money market mutual fund?
• Most importantly, clients have immediate access to their cash, regardless of market conditions. (A mutual fund is allowed to postpone redemptions up to five business days in unstable market conditions.)
• Second, through Sentinel, clients know exactly what they own. Sentinel sends daily emails (or faxes, if preferred) to each client reporting the total amount invested, the interest earned, and supporting securities. In contrast, mutual funds are typically sent statements on a monthly basis at most, and report assets owned by the fund only quarterly or semiannually, often two to three months following the reporting date.

How frequently can I deposit or withdraw cash?
• Sentinel clients can withdraw 100% of their cash daily. Sentinel accepts deposits of any amount daily. A cutoff time of 4:00PM (eastern time) applies for notification of intent to redeem or make deposits same day.

LOL !! :D :D :D
 
I thought Goldman's decision was temporary and only for a select few investors. They are trying to give confidence to the market and save their name. Unless Goldman raises the fund's NAV it will have to close the fund due to various agreements with other prime brokers that stipulate the fund must maintain a certain NAV.

This is not a new model, its just a way to keep the fund alive through this market turmoil. If the markets calm down then hedge funds will be back to business as usual.

-Neo
 
Quote from Don Bright:

"... according to Bloomberg and Goldman Sachs the new fee structure is a huge difference.

Old way, 2% management fee - now zero.

Old 20% of all profits - now.... fund must pay 10% to investors first before GS gets anything, and then GS gets 10% of profits on the rest of whatever profits there might be...."
More...

Is Goldman changing existing HFs to these params or will it be only for new ones?
 
Quote from gnome:

Is Goldman changing existing HFs to these params or will it be only for new ones?
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All I can tell for now is that they are changing existing funds, a few not all. It may be a trend, it may just be temporary, time will tell.

Don
 
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