Latin American Hedge Funds
Latin American Hedge Funds Hold Firm on Fees
Hedge funds in Latin America seem to have found the cure to pressure from investors to lower fees: good performance. Investors in Latin American hedge funds are exerting less pressure on managers to slash fees than their American and European counterparts.
Investors in Latin American funds have largely abided with the industry norm of the so-called "2-and-20" fee structure, where managers charge 2% of assets as management fees and 20% of profits as incentive fees.
"Although in 2009 Latin American start-up funds did lower their fees in line with investor demands, the average performance fees of funds launched in 2010 are back at 20%," Eurekahedge said.
Latin American funds charged 1.95% as management fees and 20% on performance gains last year, on average. In contrast, Asia-focused hedge funds charged an average 1.56% and 19.22%, respectively, and global funds charged 1.59% and 18.91%, on average.
Latin American funds' resilience on fees was largely due to stable performance throughout the past decade. And the region is becoming increasingly attractive to investors in light of recent events.
"Geopolitically, Latin America seems to be safe, especially with all the crises in the Middle East and the unfortunate incident with Japan," said Victor Hugo Rodriguez, president and chief executive of third-party marketer LatAm Alternatives. He was recently appointed one of five directors of Hedge Fund Association's new Latin American chapter. Source
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