So much for 2 and 20, eh? The average management fee charged by hedge funds is now 1.45 percent, according to Ernst & Young’s ninth annual Global Hedge Fund and Investor Survey, obtained by Alpha. Managers with more than $10 billion charge, on average, 1.51 percent of assets under management while those with $2 billion to $10 billion get, on average 1.48 percent. However, smaller managers who are in less of a position to aggressively negotiate with potential investors, report an average management fee of just 1.33 percent.
“At the heart of the issue is a more sophisticated investor base and the competition for capital being at an all-time high,” the survey said. In fact, 60 percent of managers say they have offered lower management fees for large mandates. However, managers are not as willing to negotiate the incentive fees. Just 34 percent said they are willing to negotiate such fees. However, 70 percent are willing to haggle over terms of incentive fees, such as imposing minimum hurdle rates, tiering of incentive rates, reinvestment of incentives and/or crystallization periods longer than a year, according to the survey. The survey was conducted by Greenwich Associates, which had 109 telephone interviews with hedge funds representing more than $1.4 trillion in assets under management and 57 interviews with institutional investors representing nearly $1.83 trillion in assets, with roughly $413 billion allocated to alternative investments.
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More woes for Brevan Howard Asset Managment. The London-based macro firm cut its support staff in half across its offices throughout the world, according to Reuters. Last week, Bloomberg reported that total assets at the firm have declined by about $3 billion in the past nine months, to $24.8 billion. It doesn’t help that its main macro fund was up just 0.2 percent through September after suffering its first loss last year. We reported last week that BH Macro, which invests substantially all of its assets in the Brevan Howard Master Fund, lost 0.6 percent in October. As a result, its U.S. dollar shares are now down 0.23 percent for the year.
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Greenwich, Connecticut-based Viking Global Investors disclosed that as of October 29 it owned more than 29.7 million shares of Broadcom, or 5.3 percent of the semiconductor company. The stock is up more than 4 percent already since that date.
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Hedge fund manager Danny Yong of Dymon Asia donated $5 million—about $3.5 million U.S. dollars—to The National Gallery Singapore, according to the Straits Times of Singapore, reportedly the largest cash donation to museum ever. The money will be used to fund acquisitions of art for the museum’s national collection. Last year Yong made $130 million, making his debut on the rich list by qualifying for the second team.
