In an effort to reassure their investors, hedge fund managers are placing large bets with their own funds.
According to a survey by the Alternative Investment Management Association, managers' average investments in their own funds increased from 6% in 2019 to 8% of all assets under management in 2022.
Compared to large funds, smaller hedge fund managers are more likely to invest their own money. In contrast to funds with assets over $1bn, hedge funds with assets under $1bn typically invested 9.3% of their own capital.
A strong personal commitment to their fund, according to over three-quarters of hedge fund managers, helped them align their interests with those of their investors.
A flexible fee structure and more transparency are now the cornerstones of relationships between managers and investors, according to a report by RSM International based on a survey of 138 alternative investment managers.
According to the survey, the hedge fund "2 and 20 fees" structure, which consists of a 2% management charge and a 20% performance fee, is unlikely to fully return.
Tom Kehoe, global head of research and communications at Aima says: “Through more flexible fee models, new products, value advisory services, as well as greater transparency and knowledge sharing, our analysis reveals a more strategic partnership that results in a deeper alignment of interests between both parties,”
Reference: (2023. February 22) Financial News.
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