Man Group Plc, the world’s largest publicly traded hedge fund firm, is implementing pass-through fees for clients of its multi-strategy hedge fund, aligning with a practice popularised by peers including Millennium Management and Citadel, according op a report by Bloomberg.
The report cites a recent regulatory filing as revealing that the fees, designed to cover compensation and other operational expenses, will apply to new capital invested in the firm’s hedge fund, Man Strategies 1783, starting this month.
The adoption of pass-through fees is becoming more common among multi-strategy funds, allowing them to attract top talent, enhance their infrastructure, and expand technology. Investors, eager to join funds managed by seasoned portfolio managers who can deliver consistent returns, are often willing to accept these additional fees.
Man Group, which manages around $178 billion, declined to comment on the fee structure.
Launched in 2020 with $500m, Man Strategies 1783 has since grown to $1.5bn under the leadership of Greg Bond, Man Group’s head of Americas. The fund can allocate capital across approximately 70 internal strategies, encompassing both discretionary and algorithm-driven approaches, according to a document obtained by Bloomberg.
New investors in Man Strategies 1783 will be charged pass-through fees to cover performance-linked pay and recruitment costs, in addition to lower management and performance fees of 1% of net assets and 15% of profits, respectively. While Man Group’s pass-through fees focus solely on compensation costs, other multi-strat managers pass on a broader array of expenses, raising concerns among some institutional investors that these firms may lack an incentive to manage costs efficiently. Pass-through expenses typically range from 3% to 10% of net assets.
