Hedge funds that charge most tend to perform best, Barclays study shows

Hedge funds have fresh ammunition to push back against detractors who have long criticized their hefty fees.

The firms that charge the most – often the industry’s biggest names – tend to produce better returns over time than less expensive competitors, according to a recent study by Barclays’ Capital Solutions group, which examined about 290 hedge funds, their fees and the ultimate payoff.

Multi-manager funds, which use pods of traders to invest across markets, were among the best performers. Those that charge full pass-through fees – meaning clients pay for the cost of operations, portfolio-manager compensation and other expenses – “generated superior net returns,” according to the study. They also produced more alpha, or excess returns over benchmarks, than peers who charge only partial pass-throughs or none at all….. see Bloomberg report