Winning With Liquid Alternatives: How to Achieve Your Financial Goals by Investing in ’40 Act Alternative Mutual Funds

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Assessing Liquid Alternative Expense Ratios

Early chapters of this book made the point that the overwhelming majority of hedge funds carry fee arrangements that are a management fee of 2 percent plus a performance fee of 20 percent with a high-water mark. A less well-known feature of hedge funds, and certainly not emphasized by hedge fund managers or general partners, is that limited partners also pay a variety of other expenses as well. There are no existing academic studies documenting the amount of these fees, but industry professionals probably agree that these fees can amount to as much as 1 percent per year. Thus, assuming that the hedge ...