Balyasny Asset Management LP, a Chicago-based investment firm overseeing $2 billion, is offering reduced fees on its biggest hedge fund as it seeks to increase assets, according to three people briefed on the matter.
A new share class charges a 2 percent annual management fee and 30 percent of profits, said the people, who asked not to be named because the information is private. Existing share classes pay compensation costs for the firm’s investment teams, as well as the 2 percent management fee and 20 percent of profits. Investment expenses and performance fees combined have usually exceeded 30 percent of profits.
Balyasny, started in 2002 by Dmitri Balyasny, is among the few hedge funds that pass along expenses to clients. Another, Citadel LLC, may cut fees for its biggest funds, two people with knowledge of the firm’s plans said earlier this month. Renaissance Technologies Corp. is trimming fees for one of its hedge funds, according to a person familiar with the matter.
“Hedge funds are becoming more and more investor-friendly given how difficult it is for them to get assets through the door,” Matt Simon, a senior analyst at Tabb Group, a financial- services consulting company in New York, said in an interview.
Barry Colvin, a vice chairman at Balyasny, confirmed the details of the new share class and declined to comment further.
Almost all of the $23 billion put into hedge funds during the first half of the year went to those with more than $5 billion, Chicago-based Hedge Fund Research Inc. said on Sept. 15. Such funds account for 60 percent of the industry’s $1.6 trillion of assets.
Balyasny’s new share class is for clients that can invest at least $10 million, said one of the people. Investors will pay a 4 percent penalty to withdraw money during their first year. Redemptions after the first year are quarterly.
The firm, whose assets peaked at $2.3 billion in September 2008, also is introducing a new share class with the original fee structure that will allow clients to take out their money on a monthly basis without any restrictions in the first year, said one of the people.
Expenses at Chicago-based Citadel, which oversees $11.1 billion and is run by Ken Griffin, usually range from 4 percent to 6 percent. A comparable figure for Balyasny wasn’t available, the people said.
Renaissance, based in East Setauket, New York, will cut management fees for its Renaissance Institutional Equities Fund to 0.35 percent from 0.5 percent for Series B, its biggest share class, starting in January, according to a person familiar with the firm. Renaissance will lower the management fee for Series A shares to 1.5 percent from 2 percent.
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