RT Journal Article
SR Electronic
T1 An Equitable Structure for Hedge Fund Incentive Fees
JF The Journal of Investing
FD Institutional Investor Journals
SP 31
OP 43
DO 10.3905/joi.2004.434549
VO 13
IS 3
A1 David K.C. Lee
A1 Steven Lwi
A1 Kok Fai Phoon
YR 2004
UL https://pm-research.com/content/13/3/31.abstract
AB There are a variety of problems in fee structures between hedge fund managers and their clients. Examples here illustrate issues such as the free rider problem and the “claw-back” syndrome that can arise in fee contracts. A different “equalization” process that is both equitable and transparent to investors would involve multiportfolios that give any fund a structure similar to that of a partnership organization, and overcomes the current drawbacks in contracts. Application of this structure should improve fund manager and investor compatibility.