Are your funds still able to charge 2/20? Given how commoditized this all seems, can’t imagine the effective fees being 2/20… (accounting for seed investment, anchor cap etc)
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Very rare unless you’re one of the GOATs like RenTech etc.
Rentech is only charging 2/20? Also, do they still take outside funds?
Read somewhere they charge 5/44. Also, think they're closed to new outside capital
edit: this is just for medallion fund btw
Would you say more like 1/15 now?
Unless you’re Renaissance, I don’t think a whole lot of other funds charge 2 and 20 (speaking specifically to SM, not sure what MM do nowadays). Ive seen management fees either cut to ~1%, if not, done away with at some smaller places which are still trying to ramp up AUM, which is A LOT of funds.
Top multi-managers/platforms and macro funds can still get 2/20 (in some cases more) with effective fees higher in some cases given how costs are passed through to LPs. That said, industry wide, it is a different story. As of 12/31/21 and according to HFR, the average fee was ~1.4% and average carry was 15%. In 2010, the average fee was ~1.6% and average carry was 19%. So there certainly has been ongoing fee compression for the past decade. Funds will often have various shareclasses with higher fees/incentive for quarterly or shorter term liquidity. If you're willing to lock up your capital for longer periods, fees will go down.
Rentech's institutional funds actually have pretty low fees... fees may compress a bit more but who knows. With higher rates and dispersion, this might be a good environment for shorting and there might be some real alpha again.
DE Shaw charging 3.5 / 40. So clearly there must be some demand out there
As someone who worked in a HF FoF, plenty of 2/20s. Lot of 1.5s/15s as well.
My fund charges 2/33
Is this a SM? Rough ballpark size and are you guys fundamentals or combine that with some tech that gives an edge that helps consistently outperform?
Seems like fee pressure definitely going to get worse in the next 5 years.
The top performing places are charging that if not more. Some are using this year as an opportunity to up the fees if they’ve performed well (as someone else mentioned DE Shaw upping their fees). The top places will keep doing this, new shops and those struggling are giving major discounts.
MM Im working with right now is charging 2/20
Most mm funds are passthru not 2%. And passthru includes comp before the 20% GP take.
Im an intern - mind explaining what u mean by pass-through?
are the working hours really that good at HFs?
Just need to look at ADV Part 2s - for rentech, medallion charges 4/36-44 while the RIEFs charge 0.2-1.5/0-10. In terms of other funds charging 2/20, there are tons of funds that still charge that, but most will also give discounts or make other arrangements based on agreements.
In Ted Seides book (guy who seeded 100s of funds), I love when he mentions that everyone thinks they are proposing a new or innovative fee structure, but that almost every type of arrangement has already been tried out before and does not make your launch special. Basically, whether it be discounts, only charging performance fees, requiring hurdles, scaling fees, etc., it has been done. At the end of the day, there are a lot of funds out there that still offer a quality investment product and they will be able to charge a premium for their services. On the whole though, the days of everyone setting up shop and running an undifferentiated strategy with high net exposure and charging 2/20 are over - but still plenty of strategies crushing it that can charge a premium.
Many MMs charge above 2/20.
My shop does cost + 20
interesting how people are quoting rentech, are they the best in the business now or what? I suppose DE Shaw?
I suppose it's shooting yourself in the foot to hard-press on 2/20 these days, but multi-strat are hard on their own pass-thru model which works fine. It's a leaner structure which beats out the FOF fee structure, on top of already beating them out strategy-wise
Rentech has been the best in the business for decades
nice one man. Quant has also been the best performing strategy of recent years, followed by multi-strat.
Ironic username. Or maybe not. Did you see 2020 performance? RIDGE, RIDA, etc. all down 30-35%. And then also tough 1h-21 and ok/mediocre 2h-21
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