Desicritics.org- Let us compare them with a charity, ok? A charity generally spends about 13-14% on management and administration fees. In other words, out of £100 that it gets in contributions and grants, on an average, it manages to spend £86 on the objective (on food, orphans, animals, starving rare dung beetles, or what have you). I have not heard of charities investing their own funds so I am presuming that whatever comes in, goes straight out less admin fees. (If they do invest, say in gilts, assuming 1.2% return, you are looking at perhaps a quid or two more maximum).
But look at hedge funds. Hedge funds generally charge 2% management fee and 20% of the return. Last year, the average hedge fund return after fees was about 13%. So lets apply those figures to a theoretical £100 investment in a hedge fund. £100 less 2% management fee =£98. A return of 13% gives me £12.74 and I take away 20% from it leaving me with £10.192 return. So I withdraw £98 as my principal, add £10.192 and I end up with £108.192 compared to £86 from a charity.
