Hedge Funds in Crisis Amid Poor Performance, High Management Fees

By:
Dominic G. Diongson
Published Date:
Sep 28, 2016

Cash

Hedge fund titans have recently sounded an alarm on their industry, pointing out to poor performance and a challenging environment for investment.

Julian Robertson, founder of Tiger Management Corp., said in an interview with Bloomberg News on Tuesday night that the industry was being buffeted by low interest rates and high stock market valuations, which are making it difficult for fund managers to make money.

Earlier this week, Perry Capital LLC said it planned to shut its main fund following a recent poor performance in its 28 years of operation. 

The Financial Times reported that Perry’s assets under management had fallen to $4 billion this year from a high of $15.5 billion in 2007.

Hedge funds have been increasingly under pressure to justify their high fees, which are typically set at 2 percent annual management fee of assets and 20 percent of any gains. Fund managers who had bet on the mortgage crisis in 2008 profited handsomely but have since then failed to match those spectacular gains. 

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