Gotham Asset Management, the $6 billion money manager run by Joel Greenblatt and Robert Goldstein, is exploring a new fee structure for its hedge funds, one of a group of firms tying more of their pay to performance. The firm is in talks with some investors for its Gotham Neutral Strategies hedge fund about charging one fee: the greater of a 1% management fee or 30% of returns that exceed the fund's benchmark, according to two people familiar with the matter. The equity fund currently charges 1.5% of assets in management fees and 20% of profits, one of the people said. Hedge funds have been trimming and altering their fees amid a backlash over lackluster returns and criticism that the standard model of charging a 2% management fee and a 20% incentive fee is too expensive. Most hedge funds charge investors too much for the performance they deliver, Mr. Greenblatt, who is Gotham's co-chief investment officer, told Bloomberg Television in a May 2014 interview. If the new fee structure is adopted, Gotham would join Hong Kong-based hedge fund Myriad Asset Management and others in moving to the 1-or-30 model, which has been championed by investors including the Teacher Retirement System of Texas. As of mid-February, at least 16 multi-billion-dollar hedge funds worldwide are either in the process of implementing or have implemented the 1-or-30 fee structure that was introduced to the industry in the fourth quarter of 2016, Jonathan Koerner of Albourne Partners said in a telephone interview on Feb. 16. "The objective of '1 or 30' is to more consistently ensure that the investor retains 70% of alpha generated for its investment in a hedge fund," Mr. Koerner wrote in a white paper published in December by Albourne, which advises clients on more than $400 billion of alternative investments globally. The management fees charged in a year when the fund underperforms the benchmarks are deducted from the following year's performance fee payment, making it, in effect, a prepaid performance fee credit, he said last month. The Gotham Neutral Strategies fund gained 7.5% last year, according to another person familiar with the matter. The HFRI Market Neutral Index was up about 2% in that time. Since inception in July 2009, the fund has gained an annualized 7%. The Gotham Penguin Fund, which wagers on and against U.S. stocks, gained 25 % last year, according to one of the people familiar with the matter, compared with a 5.4% rise in the HFRI Equity Hedge Index. Since inception in 2013, the fund has returned an annualized 15%. A representative for the firm declined to comment.
Nine-month electronic trading freeze and share lending program at the center of dismissed claim.
Meanwhile, Rossby Financial's leadership buildout rolls on with a new COO appointment as Balefire Wealth welcomes a distinguished retirement specialist to its national network.
With a smaller group of companies driving stock market performance, advisors must work more intentionally to manage concentration risks within client portfolios.
Professional athletes are often targets of scam artists and are particularly vulnerable to fraud.
The brokerage giant tells Wall Street it will use artificial intelligence to reach clients it has never been able to serve — and turn the technology's perceived threat into a competitive edge.
As technical expertise becomes increasingly commoditized, advisors who can integrate strategy, relationships, and specialized expertise into a cohesive client experience will define the next era of wealth management
Growth may get the headlines, but in my experience, longevity is earned through structure, culture, and discipline
