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As 2-and-20 Fees Under Fire, Asia Hedge Funds Seek Cost Cuts

  • Bigger funds are joining ‘platforms’ as costs rise, fees fall
  • Credence Global, Black Crane among hedge funds on platforms
Bloomberg business news

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When Ruhong Huang’s Hong Kong-based hedge fund crossed a key milestone after gathering $100 million in assets, he made an unusual choice. Rather than continuing to go it alone, he decided to join a “platform” to help his firm with everything from hiring administrative staff to handling compliance.

While Huang’s move is uncommon, he isn’t alone. Hedge fund platforms in Asia, which traditionally have helped fledgling firms with a few million dollars set up shop, are now seeing bigger managers turn to them to help save as much as 90 percent of their annual operating costs. That’s signaling a fundamental change in the economics of the hedge fund business, as investors are balking at the hefty "2-and-20" fees that were once a fixture in the industry and compliance costs are spiraling higher.