Millennium to charge fees even if fund loses money

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Millennium Management, the hedge fund founded by Izzy Englander, has changed its investor terms so that clients will now always be charged a minimum management fee, even if the fund loses money, according to a report by Bloomberg.

The report cites an investor letter as revealing that under the new charging structure, investors will now pay annual fees of about 1% of assets or 20% of investment gains – whichever is greater. According to Millennium, the move is part of an initiative to “reflect current industry-standard approaches” employed by other multi-strategy firms. Ken Griffin's Citadel, for instance, has implemented a similar fee structure. 

The change, which is expected to take effect this summer, means that if the firm loses money or generates an annual return of less than 5%, it will still be guaranteed fees amounting to hundreds of millions of dollars. The firm which was funded in 1990, has only returned less than 5% in two years: 2008 and 2016. 

According to the letter, if Millennium does end up levying the 1% asset charge, the fund will have to recover that amount before levying a performance fee the following year.

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