In Concert, a new survey and study by the Alternative Investment Management Association (AIMA), takes an important look at the changing and more cooperative nature of relationships between hedge fund managers and their investors.
Since the financial crisis, relationships between hedge fund managers and investors have seen fundamental changes, largely driven by investor demands for increased transparency. This important paper explores the key changes that closer partnerships between hedge fund managers and their investors are delivering.
In Concert looks at key issues, including:
- measures used to control fees, including high-water marks, hurdle rates and fixed-percentage thresholds, as well as ways that investors can negotiate lower rates by accepting longer lock-up periods, allowing fund managers the time to better execute their investment thesis;
- methods fund managers can use to make their offering more appealing to investors, including increased transparency and having their personal capital invested in the offering’s strategy;
- various fee structures fund managers can employ, including a look at the cost-push factors that led to the two per cent management, 20 percent incentive fee (or two and 20 as it is commonly called), special share classes that provide discounts to certain investor groups, and tiered fee structures that reduce fees as assets under management increase; and
- the benefits that these more aligned and flexible relationships between fund managers and investors can deliver for both parties.
Relationships between hedge fund managers and investors will continue to evolve. This important study provides both parties key insights into how to best shape this relationships for the future.