Jesse Eisinger has an important piece up at DealBook today. Not sure how the cross-posting things works, maybe DealBook makes a donation to save pandas and they get a ProPublica contribution? I don’t know. Anyway, it’s about how hedge funds have gotten themselves back to the pre-crash asset levels they used to enjoy – but with strings attached.
The investors who are committing capital are now in the driver’s seat, signing a check over to a manager is no longer the equivalent of “signing their lives away”.
Hedge funds are now beginning to resemble, gasp, mere mortals! They look more like us in the asset management business than the Gods of yore. Call it a Reverse Apotheosis if you will (and I will because it makes me sound smart)…
Another sign of the new rationality is that hedge fund fees are finally creeping downward, a trend long predicted that had not ever managed to arrive.
In the past, hedge funds have been something of a “Giffen good” — that unusual market phenomena of demand rising as the price climbs. The more the hedge funds charged and the more exclusive they were, the more they were desired. Incentive fees, however, have finally begun to ebb, down to 19 percent from 19.3 percent three years ago, according to Hedge Fund Research.
And you should also know that, in the aggregate, hedge fund performance has been nothing special…also, all that money being raised is way more concentrated amongst the big funds, little funds can’t even get themselves arrested these days. Most importantly, they’re paying these guys like regular asset managers because, in reality, that’s all most of them are.