High hedge fees here to stay, report says

Despite faltering performance for hedge funds in the last few months, fees aren't dropping anytime soon, Reuters reported. In the past, clients have been willing to pay the standard two-and-20 for hedge fund access where fund managers would charge two percent in management fees, plus 20% of the profits, known as a performance fee. Some of the most elite funds have charged up to 50% in performance fees, Reuters reported. “It would be an overstatement to say there is a threat to the [hedge funds’] fee structure,” said Brian Moynihan, president of Bank of America’s global wealth and investment management division, to Reuters. The fund managers provide clients with high returns on a routine basis in exchange for high fees. The best managers will continue to be able to charge top dollar for their services, he added. After August’s turmoil, when most hedtge fund strategies underperformed, virtually all hedge strategies were profitable during September, according to data from Hedge Fund Research Inc. of Chicago. The only laggard was the short-selling strategy, which booked an average loss of 3.14%.