The 2% management fee is paid to hedge fund managers regardless of the fund's performance. A hedge fund manager with $1 billion of assets under management (AUM) earns $20 million even if the fund performs poorly.
Most common is as a percentage of investment profits, often both realized and unrealized. It is largely a feature of the hedge fund industry,
Hedge fund fees are often higher than those of mutual funds and they frequently involve both a management fee and a performance fee. A commonly-quoted hedge fund fee is “two and twenty”—an annual two percent of assets fee plus 20 percent of the gains over some base return or “hurdle rate.”
Management fees typically range from 1% to 4% per annum, with 2% being the standard figure. Therefore, if a fund has $1 billion of assets at year-end and charges a 2% management fee, the management fee will be $20 million.
The 2 and 20 is a hedge fund compensation structure consisting of a management fee and a performance fee. 2% represents the management fee ( flat rate fee)
Hedge fund managers receive a management fee (typically between 1%-2% annually) plus a percentage of the funds performance (often set at 20%).
One reason hedge funds have become so popular is that money managers want to Most hedge funds take a percentage of the profits as a performance fee
The challenge with hedge fund fees is that they typically come with two components. Most hedge funds charge a fixed fee based on a percentage of assets
Average management fees declined to a record low of 1.43 percent in the first quarter, according to a statement Wednesday from Hedge Fund
A traditional fee structure of “2 and 20” (a 2 percent management fee number of hedge funds have lowered their fees to about 1.5 percent of