In summary
Investors determine whether hedge fund fees and redemption terms are appropriate through the manager selection process. Consideration is given to whether a fund’s terms reflect the manager’s ability to efficiently run their business, and to deliver consistent, high-quality returns.
In this piece we explore how and why hedge fund fees and redemption terms differ across strategies, fund sizes and manager locations.
According to Aurum’s Hedge Fund Data Engine[1], the highest average fees are typically charged by managers based in Asia, and by those running statistical arbitrage, global macro and multi-strategy funds. Meanwhile, funds with the lowest fees are run by European managers and by those running long-biased strategies with elevated beta, and risk premia which aims to cost-effectively replicate existing strategies.
Certain event-based strategies and those focused on credit, with larger AUM, or that are managed from the US, generally have longer redemption periods. Risk premia or CTA strategies, those with smaller AUM, or that are managed from Europe, have the shortest redemption periods.
