New hedge fund managers are struggling to attract investment to their funds with inflows in 2023 falling to new lows, according to a report by Reuters, citing a client report published by Goldman Sachs on Friday last week.
Established hedge funds, meanwhile, have hiked fees to the highest on record, illustrating a growing bias towards established and bigger hedge funds that average higher returns for their investors, said Goldman.
Hedge fund launches — which fell by 6% in Europe, 14% in the US and 8% in the APAC region last year — were up, but according to Goldman’s figures, 2023 still marked a second consecutive year of record low launches.
Management fees rose to their highest since 2012, according to the report, which canvassed the opinions of 358 investors with over $1tn in assets allocated to hedge funds, prompting them to focus on agreeing more favourable terms with managers including having fees fall as AUM rises, or agreeing hurdle rates which dictate when fees are payable.
Almost half of those surveyed said they planned to ask for the latter in 2024, while a fifth are targeting a loyalty discount, with 11% staying that in exchange for fee reductions they would be prepared to lock up their cash for longer.