An Equitable Structure for Hedge Fund Incentive Fees
Publication Type
Journal Article
Publication Date
9-2004
Abstract
There are a variety of problems in fee structures between hedge fund managers and their clients. Examples here illustrate issues such as the free rider problem and the “claw-back” syndrome that can arise in fee contracts. A different “equalization” process that is both equitable and transparent to investors would involve multiportfolios that give any fund a structure similar to that of a partnership organization, and overcomes the current drawbacks in contracts. Application of this structure should improve fund manager and investor compatibility.
Keywords
Performance Fee, Equalisation, Hedge Funds, Free-rider, Clawback, Alernative Investment, Multi-porfolio Approach
Discipline
Finance and Financial Management
Research Areas
Quantitative Finance
Publication
Journal of Investing
Volume
13
Issue
3
First Page
31
Last Page
43
ISSN
1068-0896
Identifier
10.3905/joi.2004.434549
Publisher
Institutional Investor Inc
Citation
LEE, David K. C.; LWI, Steven; and PHOON, Kok Fai.
An Equitable Structure for Hedge Fund Incentive Fees. (2004). Journal of Investing. 13, (3), 31-43.
Available at: https://ink.library.smu.edu.sg/lkcsb_research/3362
Additional URL
https://doi.org/10.3905/joi.2004.434549
