Ideal HF Fee Structure

C

CPTrader

Hello Friends:

I've been thinking a lot about the current state of the HF industry and complaints about compensation/fees, etc.

So I want to open this thread to debate.

In your opinion what is the best HF fee structure that balances the needs of the investor AND the Hf manager?

Issues to consider: mgmt fee, performance fee, lock-ups, min investment, liquidity, hurdle rate, high-water mark, clawback clauses, max drawdown redemption trigger, etc?

Answers should be represented as follows:

Mgmt Fee: ___
Perf Fee:_______
Lock-up: Y/N, if Y, how long
Redemption Fee: Y/N, if Y, how long
Min Investment:
Liquidity:
Hurdle rate: Y/N, if Y, what rate
High Water Mark: Y/N
Clawback Clauses: Y/N, if Y, specific terms of such clause
Max Drawdown redemption Trigger: Y/N
Special: Any special rebates for investors who commit large sums or agree to lock-ups:

Feel free to be creative: 2/20 should not be the benchmark or the base.
 
Quote from CPTrader:

Hello Friends:

I've been thinking a lot about the current state of the HF industry and complaints about compensation/fees, etc.

So I want to open this thread to debate.

In your opinion what is the best HF fee structure that balances the needs of the investor AND the Hf manager?

Issues to consider: mgmt fee, performance fee, lock-ups, min investment, liquidity, hurdle rate, high-water mark, clawback clauses, max drawdown redemption trigger, etc?

Answers should be represented as follows:

Mgmt Fee: ___
Perf Fee:_______
Lock-up: Y/N, if Y, how long
Redemption Fee: Y/N, if Y, how long
Min Investment:
Liquidity:
Hurdle rate: Y/N, if Y, what rate
High Water Mark: Y/N
Clawback Clauses: Y/N, if Y, specific terms of such clause
Max Drawdown redemption Trigger: Y/N
Special: Any special rebates for investors who commit large sums or agree to lock-ups:

Feel free to be creative: 2/20 should not be the benchmark or the base.
More...
Hedge funds are dead.

People will only trust managed accounts, if that.
 
Quote from crgarcia:

Hedge funds are dead.

People will only trust managed accounts, if that.
More...

Some people will never agree to managed accounts (e.g. some quantitative traders) and managed accounts can also be prone to fraud if done incorrectly a la Madoff. If the managed account is with a broker controlled by the trader as in the madoff case.. where's the protection.

The ideal HF setup for protection is:

A Fund Bank account with joint signatories (Fund manager and Fund Administartor),

a Fund Brokerage account with an independent prime broker,

a Fund administrator that liaises directly with the Fund Broker to provide valuation, receive/disburse subscriptions, redemptions, fee payment,s etc,

a Fund auditor and

Fund legal counsel.


When thus is done right there are no problems. all the HF fiascos exist in cases where one of these key horsemen was non-existent or weak.

In event this thread is not to discus the viability of HFs or HFs vs MAs; so please keep comments on topic or create your own thread. Thank you.
 
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