| Jon Lee |
| | 02/14/08 at 09:26 PM | Reply with quote | #1 |
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I have a question regarding the fee structure so if there's anyone
that can give me an answer, I'd be really grateful. I know that the regular fee structure is 2%/20%.
However we are trying to launch a fund with a fee structure of twice that,
4%/40%. would we be able to raise money?
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| ChiliPepr |
| | 02/21/08 at 02:08 PM | Reply with quote | #2 |
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I am not sure anyone would believe you... but if you really believe you can return 40% after your fees, go with a priority return on your fund....
Basically you state "If I make less than 15% I collect no fees, from 15% to 40% I will take 50% of everything over 20%, anything over 40% and I take 40%...
If you are successful, you can gradually lower the priority rate.
As for the 4% management fee... why do you need twice the money as everyone else to manage the money... if you can answer that you may have a chance.
but honestly, if you do not have a big name I doubt you can get those fees.
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| Chakrapani |
| | 03/22/08 at 01:42 AM | Reply with quote | #3 |
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I have rarely seen such high fee structures. It is only possible when you have good name in the market or good fund manager. I suggest to go for 3%/30% first. Once you have proven track record for a year than you can charge new fee structure with the new investors. You can always have some proven numbers to show them.
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| ben |
| | 06/21/08 at 11:49 AM | Reply with quote | #4 |
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| no, no one will believe you unless you have a strong track record you can bring with you. you are better to offer a discounted mgmt fee 1 - 1.5% and then a higher performance fee with a performance hurdle of some kind. |
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| Agustin |
| | 06/30/08 at 05:43 PM | Reply with quote | #5 |
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Quote: Originally Posted by ben
no, no one will believe you unless you have a strong track record you can bring with you. you are better to offer a discounted mgmt fee 1 - 1.5% and then a higher performance fee with a performance hurdle of some kind.
Agreed.
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| Dean |
| | 08/04/08 at 04:40 PM | Reply with quote | #6 |
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The issue with this approach is that many institutional investors take a mechanical approach to due diligence - you need to tick certain boxes to get through investment committee, and 4/40 would prove to high a hurdle (no pun intended) for the fund investor. It will be easier for them to go to a fund with a more conventional structure than try to convince their IC around your fees. I therefore agree with other posters that you would have close to zero chance of success. |
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| JB |
| | 08/06/08 at 03:57 PM | Reply with quote | #7 |
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Please also note that the SEC takes the position that stating to potential investors that you are targeting a 40% return is misleading unless you have a reasonable basis for assuming that you will achieve that level of return. Simply being optimistic would not be deemed sufficient. As an attorney, I would recommend that clients do not make such a statement unless they have hard data to back it up. |
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| Richard Wilson |
| | 08/06/08 at 04:13 PM | Reply with quote | #8 |
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Please obey the rules of the message board and do not sell products, securities, portfolios or provide % return statistics from past years or potential future years for your funds here on HedgeFundMessageBoard.com. The only way we can stick around is if we stick to these rules.
- Richard
Richard Wilson
Hedge Fund Group (HFG)
http://hedgefundgroup.org
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