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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