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Hedge funds move away from unpopular ‘two and 20’ fee model – survey

(Reuters) – Hedge funds are ditching the traditional “two and twenty” fee structure that has hurt the sector’s public image and invited criticisms of poor value for money, a global survey of hedge fund managers showed on Wednesday.The ‘two’ refers to the 2% annual management fee charged by fund firms on the assets managed, while the ‘twenty’ refers to the 20% of profits made by the fund above a certain predefined benchmark. The fee arrangement has become increasingly unpopular among some hedge fund clients, who believed they were paying too much upside to managers when bets performed well.

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