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