Hedge Fund Manager Devotes Part of its Fees to Charity
New Hedge Fund launched for a charitable cause
Christopher Hohn has created the first hedge fund devoting some portion
of its fees for charitable organization. Hohn was a former fund manager
at Perry Capital, where he spent about seven years; he is regarded as
one of the best fund managers in Europe. While at Perry Capital, Mr. Hohn
managed the Perry European Fund with the assistance of Richard Perry;
the fund earned about US$1 billion for its investors before it was liquidated.
Mr. Hohn’s new hedge fund; the Children’s Investment fund
was one of the largest hedge fund launches in Europe recently and total
assets managed by this hedge fund quickly grew to about US$700 million.
According to published reports, about two thirds of the total assets in
the Children’s Investment fund is locked in for a period of five
years, while the rest of the assets have been committed for three years.
First hedge fund of its kind
The Children’s Investment Fund Foundation is managed by Mr. Hohn’s
wife Jamie Cooper-Hohn, the board of the new foundation also includes
officials of some United Nations international agencies such as UNICEF
and UNAIDS. The foundation would receive fifty percent of the Children’s
Investment fund annual management fee of 1%, which amounts to about US$3.5million
yearly. Such amount would ultimately be used to fund different Children’s
projects in Africa and India.
It is also understood that for every year during which the Children’s
Investment fund returns above 11%, an additional fifty percent of 1% of
assets would also be given to the foundation. That translates to roughly
US$3.5 million.
The incentive fees for the Children’s Investment Fund for the 5year
and 3year lock in periods are 13.5% and 16.5% respectively. The Children’s
Investment Fund has established a precedent by building its charitable
donations into the fund’s fees structure. However this is not to
say that other hedge funds do not give money to charity. Undoubtedly there
are many hedge funds which donate money to charity every year, but none
as far as we know have incorporated such gift into the fund’s fees
structure. The fee structure of most hedge funds falls between 1-2% for
management fees and about 20% for performance fees.
Paul Oranika
Editor-in-Chief
Hedgeco.net
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