Mark Gilbert , Columnist

$450 Billion Says Pay Hedge Fund Laggards Less

One way to ensure fees are more closely linked to performance.

October 3, 2018 at 4:00 AM UTC

Mark Gilbert is a Bloomberg Opinion columnist covering asset management. A former London bureau chief for Bloomberg News, he is author of “Complicit: How Greed and Collusion Made the Credit Crisis Unstoppable.”

Following the trend.
Photographer: Michael Nagle/Bloomberg

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Two years ago, Albourne Partners Chairman Simon Ruddick described the fees hedge funds charge as the “elephant in the room.” Disappointing returns and a lack of transparency about levies meant investors were at risk of losing interest in the market, he warned.

So Albourne, which advises about 260 clients with more than $450 billion in alternative assets, suggested the funds ditch their traditional 2-and-20 fee structure, where asset managers charge 2 percent of the assets and keep 20 percent of gains collected.