Although hedge fund returns have declined in the past 10 years, their annual fees have steadily climbed, Bloomberg reports. Today, the average hedge fund charges annual fees of 1.44% of assets, a 13% increase from 1.27% five years ago. And that doesn't include the 19.2% that hedge funds skim off performance returns.
Meanwhile, while hedge funds have continued to beat out the S&P 500 and the Lehman bond index, their returns have declined from the 1990s. During that decade, they averaged annual returns of 16%. Last year, they gained 9.2%.
Analysts say that increasing fees is unusual for a mature industry. Mutual funds, meanwhile, decreased their fees 6% in the past two years, according to Morningstar.
Nonetheless, money continues to pour into hedge funds. In the past five years, they've taken in $338 billion in new money, Hedge Fund Research data shows.
The staff of Money Management Executive ("MME") has prepared these capsule summaries based on reports published by the news sources to which they are attributed. Those news sources are not associated with MME, and have not prepared, sponsored, endorsed, or approved these summaries.