Stockholm (HedgeNordic) – Hedge funds have been reducing management and performance fees during most of the past decade, but that trend appears to be taking a breather for now. According to data from Eurekahedge, the average performance fee charged by hedge funds increased to 15.5% in 2018 from 15% in the previous year, whereas the average annual management fee rose 13 basis points to 1.3%.
Last year’s increase in management fees was the most significant annual rise in fees since Eurekahedge started collecting the data. The increase was mainly attributable to Europe- and Asia-focused funds, which saw an increase in management fees of 20 and 29 basis points during the year to 1.3% and 1.7%, correspondingly. The average incentive fee for Europe-focused funds increased 109 basis points last year to 15%, while Asia-focused vehicles registered an average increase in their performance fees of 309 basis points to 19.1%. Data from Eurekahedge gathered by Pensions & Investments also reveals that the percentage of funds charging a performance fee equal to or above 20% increased to roughly 55%from a prior figure of 45%.
Shifting focus from the global to the Nordic hedge fund industry, the average management fee charged by the 16 hedge funds launched in 2018 totalled 0.97%. This group of funds charges investors an average performance fee of 15.31 percent. The 13 Nordic hedge funds launched during 2017, meanwhile, charge an average management fee of 1.03% and an incentive fee of 16.54%. Around 55% of all Nordic hedge funds launched in the past two years charge a performance fee of 20%, though funds use different thresholds under their fee structures.
Editor’s Note: This article was originally published by HedgeNordic, the Nordic Hedge Fund platform.