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HSBC Offers Rich Clients Discounted Fees for 10 New Hedge Funds

HSBC Full-Year Profit Rises to $16.8 Billion
The HSBC Holdings Plc headquarters is seen in Canary Wharf, London. Photographer: Jason Alden/Bloomberg

March 1 (Bloomberg) -- HSBC Holdings Plc’s Geneva-based private bank is offering clients discounts of about 25 percent on fees charged by 10 new hedge funds.

“These newer funds are the next generation, the new life of the industry,” Peter Rigg, head of HSBC’s alternative investment unit and a member of the private bank’s executive committee, told reporters in Geneva today. “In the early days they really have to perform.”

HSBC can negotiate down fees in the New York, Paris, London and Asia funds, which together manage $200 million, said Rigg, who declined to identify the managers. Private clients provide part of the $38 billion invested by HSBC in alternative investments such as hedge funds, private equity and real estate.

To attract capital, hedge fund startups often agreed to lower the fees they charge investors, Citigroup Inc. said in a report earlier this week. The traditional 2 percent of assets and 20 percent of profits declined to 1.5 percent and 15 percent, respectively, according to the report.

Hedge funds are mostly private pools of capital whose managers participate substantially in the profit from speculation on whether asset prices will rise or fall.

To contact the reporter on this story: Giles Broom in Geneva at gbroom@bloomberg.net

To contact the editor responsible for this story: Frank Connelly at fconnelly@bloomberg.net

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