Competition to Heat Up Among Hedge Funds Next Year

Competition is going to heat up next year in the hedge fund world and subsequently portfolio managers will see larger payouts, according to HedgeWorld.com.Profit-and-loss payouts to portfolio managers, based on a fund’s profits minus expenses, will increase to a range of about 8% to 20% due to heavy competition, according to a survey by executive recruiting firm Long Ridge Partners of New York. Additionally, Long Ridge predicted average payouts would grow by around 15%, a three percentage-point increase from this year. 

A small number of hedge funds said they would be willing to negotiate with portfolio managers, paying them a management fee on the assets they are allocating or have allocated to them.

This is a new trend among smaller hedge funds, which can’t offer as much in terms of capital and infrastructure to retain talent, so they are willing to offer portfolio managers a cut of the management fee, Long Ridge found.

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