The hedge fund industry is starting to cut its charges after big outflows and a year of falling values, according to the Financial Times.

Fees for new investors are being reduced  by cutting management fees by 0.5 per cent to 1.5 per cent and performance fees from 20 per cent to 10 per cent.

Chris Lombardy of hedge fund advisor
Kinetic Partners is quoted as saying that to begin with: “Some managers offered investors fee reductions in exchange for staying in.”

Guy Haselmann, a principal at
Gregoire Capital, a hedge fund that invests in funds of funds, said: “Fees are coming down, and they will continue to come down…The funds... want more permanent capital.”

An unnamed hedge fund manager is reported as saying: “It used to be that we gave our standard rate [2 per cent and 20 per cent performance fee] most of the time. Now, new investors paying that would be in the minority.”