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New York Times – Despite the industry’s record losses in 2008, hedge funds generally aren’t lowering their fees without concessions from investors, such as longer lock-up periods and commitments of at least $100 million, money managers and consultants tell Bloomberg News.
While Larry Powell, deputy investment chief for the $16 billion Utah Retirement Systems, could crow at a June industry dinner in New York that more than half of Utah’s 40 hedge-fund managers agreed to changes in their fees, with four adopting his recommendations, top-performing managers haven’t adjusted yesteryear’s top-dollar fees, Bloomberg says.
BusinessWeek – For years pension funds, university endowments, and other big investors essentially wrote blank checks to hedge funds and private equity firms. They readily paid stiff fees and agreed to onerous restrictions. Investors had no choice if they wanted access to the money managers and outsize gains.
All that is changing. With returns dismal and cash scarce, investors are demanding—and winning—concessions on everything from cost to oversight. "The balance of power has shifted," says a private equity executive.
In recent months some of the biggest institutional investors, including the $175 billion California Public Employees’ Retirement System, have gathered at closed-door meetings in New York and Toronto to talk about ways they might flex their newfound muscle. A number of public pensions, such as the $16 billion Utah Retirement System, have pushed firms publicly to ease terms.
Seeking Alpha – For the last few months, the media has portrayed the hedge fund industry as in desperate need to hang on to as much capital as possible. Hedge fund limited partners have purportedly been lining up demanding breaks on fees and access to capital in the future — and getting them. The truth is a little different (or at least a little more nuanced) than this perception.
Based on conversations I’ve had with managers in the industry, there are two factors which appear to differentiate between those hedge funds who have agreed to big concessions on fees and liquidity with their investors and ones who haven’t.
