Institutional Sales Specialist: Fixed and Variable Cost

[RandBots]

A group of friends were discussing yesterday the real cost increasing AUM for a hedge fund using third party fund raisers and intitutinal sales team.

Let's say the Hegde Fund charges 1.5/20 with 50M AUM

If a third party raises for the fund 1M extra. How much should the fund pay and for how long?


Here are some options people about of finance talk abou
A. Only from the management fee 1/3 for the first year.
B. Both performance and management for the existence os the client. About 50% or 25%
C. Etc...

Could you please provide some insightful info?

We go to the compulsion that the institutional wealth manager/sales from MS, GS, JPM get about 35% of the client revenue the first year plus a based salary. Is there a way small hedge fund can compete with that?

Thanks

 

[Robert Morse]

20% of all fees charged forever. I do that with CTAs. The worst decision you can make is put a time limit on the allocation fee sharing. What do you think that person will do with your allocation after he's not getting paid anymore?

 

[Chuck Krug]

In Europe the average is: one time payment of 0.75%
And then retrocessions of 0.2% a year