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Hedge Fund Management Fees Fall To Record Lows

New research from HFR suggests that management fees charged by hedge funds have fallen to their lowest ever levels. Average management fees fell -1 basis point (bps) over the prior quarter (Q4 2017) to 1.43 percent.

Meanwhile, incentive fees rose to 17.11%, a rise of 2bps.

The research also says that new fund launches exceeded liquidations for the third consecutive quarter, although both fell in absolute terms. An estimated 158 funds launched in Q1 2018, down from 190 in Q4 2017, the lowest quarterly new launch total since 153 funds were started in Q4 2016.

“Hedge fund industry growth has continued to record levels, with fund strategies and structures  evolving as both fees and liquidity continue to influence investor allocation decisions, as investors position for challenges associated with ongoing trade uncertainty and expected higher US interest rates.,” stated Kenneth J. Heinz, President of HFR. “Hedge fund positioning has shifted from the equity beta that dominated 2017 to more sophisticated, strategic exposures on complex and volatile themes including trade and tariff politics and economics, M&A across rapidly evolving media and telecom spaces, and exciting growth trends in Technology. These trends are likely to continue to drive hedge fund and financial market performance through mid-2018.”