Survey shows few hedge funds reset hurdle rates

Only a tiny number of hedge funds reset hurdle rates for their performance fees, a study by Fitzrovi...

Only a tiny number of hedge funds reset hurdle rates for their performance fees, a study by Fitzrovia has found. The survey of 393 alternative investments funds showed that 87% use a high water mark. This is to cut volatility by ensuring shareholders do not pay performance bonuses on a recovery of performance to a previous high. But only 2% of funds that use this marker reset it after a defined period of time, while the vast majority tend to make the level permanent. The standard hedge fund fee structure gives managers an annual management charge of 2% of net assets, plus a performance f...