Tag: fees


Show Me the Money

Looking at some recent hedge fund surveys, one clear trend emerges: hedge fund fees are under continued pressure. Galen Stops takes a closer look.

Each year, many of the largest investment banks publish extensive surveys regarding investor appetite and expected asset flows for the coming year. In many regards, trying to compare these surveys is tricky, given that each bank collects different data sets and then reproduces this data in very different formats.

One thing was made abundantly clear in the latest batch of surveys, however, and that is hedge fund fees are continuing to come under pressure from investors.

Bigger Not Necessarily Better: AIMA Survey Dispels

A new survey from the Alternative Investment Management Association (AIMA) and boutique prime broker GPP helps dispel the notion that bigger is always better regarding hedge funds’ asset under management (AUM).
The survey of sub-$500 million firms finds that most are able to turn a profit and expand with considerably less than $100m in assets.
The two bodies surveyed 135 alternative asset managers globally and found that the average break-even point is around $86 million in AUM, while around a third are able to break even with $50 million in assets or less.

FastMatch Adjusts Fees for 2017

FastMatch is making a number of changes to its fee schedule, effective February 1, 2017.

In a note to clients, the ECN outlines the major changes to its currency fee schedule, including extending its offer of free trading for clients that add liquidity on FastMatch’s central limit order book and are willing to trade with everyone on the platform.

FastMatch is also changing the threshold required for its clients to achieve the $2.50 per million pricing tier. Under the current free structure “clients trading more than ADV USD 1 billion or equivalent notional per billing month or 10% of single counted volume of the platform (whichever is less)”, are charged $2.50 per million.

Hedge Fund Managers Tweak the Model to Retain Assets

Hedge fund managers are becoming more innovative and open to negotiation over fees in return for the ability to lock in assets for longer.
According to a survey conducted by the Alternative Investment Managers Association (AIMA), managers are changing their business models and “exploring a broader set of arrangements designed to improve the alignment of interest between themselves and their investors”.
The study, In Concert, is, AIMA claims, the most extensive undertaken by the association into the design of manager remuneration, investment terms and other methods of deepening the relationship with investors.

And Another Thing…

Changing the habits of a lifetime is a very difficult proposition in the foreign exchange industry, but is now a prudent time for some platform providers to have what will no doubt be some very difficult conversations with their liquidity consumers about actually paying for it?
FX liquidity is a more valuable commodity than ever and LPs continue to look at where they stream, what the value from that venue is, and how they can, if at all, warehouse the risk profitably.