Rates on mutual funds have fallen to the lowest since the global financial crisis in 2008, research firm Hedge Fund Research (HFR) said on Friday (6).
The HFR said the funds’ fees fell by one basis point from the second to third quarters of 2022, to around 1.35%. Performance fees fell 4 points to 16.01%.
It was a challenging year for some classes of hedge funds, particularly those ‘long-only’ in equities. That’s because Wall Street’s three main stock indexes recorded their first annual drop since 2018 with rising inflation and the risk of recession.
The HFRI 500 Fund Weighted Composite Index, which tracks the performance of many of the largest global hedge funds, declined 2.78% in 2022 through November.
“Fees are still very high, especially in relation to the poor result, which unfortunately has been going on for a long time,” said Bruno Schneller, managing director of Invico Asset Management.
HFR said larger hedge funds fared better in the third quarter. The top performers in the weighted composite index returned a positive 10.9%, while the bottom tenth averaged a negative 14.3%.
“The hedge funds that attract the most capital and charge the highest fees are often the managers with a long and successful track record,” said David Bizer, managing director of investment firm Global Customized Wealth. “Many of the best funds are closed to new entrants in order to preserve their ability to generate attractive returns.”
Source: CNN Brasil
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