Hedge fund Fees: Element Capital Eyes 40%
Element Capital is bucking the trend by raising hedge fund fees instead of dropping them
Hedge fund fees are back in focus after Element Capital bumped its performance fee.
Manager Jeffrey Talpins announced plans to increase its fee at Element Capital hedge fund from the already pricey 25% to 40%. However, the fund will cut its management fee from 2.5% to 2%.
Talpins is bucking the trend of firms cutting fees. As we recently reported, just 30% of funds are charging 2-and-20.
Swimming against the tide
That takes some doing in an industry where peers are buckling under pressure from investors to reduce hedge fund fees.
However, some exceptions, Element Capital included, have been able to resist such demands because of their impressive track record.
Element has generated returns of above 20% annually since 2005.
The industry standard for hedge fund fees is now 1.18%-and-14.45% instead of the much-reviled 2-and-20 structure, according to EurekaHedge.
As against this, Element’s structure will be 2-and-40.
Element Capital to curtail its size
While the company plans to increase its performance fee, it will also reduce its size. By the end of 2019, Element will reduce its fund by 20%. The firm recently slashed its workforce by 10% and eliminated its portfolio manager development program.
Reducing size is a strategy to optimize performance because bigger funds have found it challenging to make market moves quickly enough without affecting prices.
According to recent regulatory filings, Element currently holds a stake in Sealed Air Corp (NYSE: SEE) and hiked its position by 37.1% during the first quarter. The firm also hiked its stake in Amedisys (NASDAQ: AMED) by 255.78% during the same period.
Latest Alternative Investment News
Accelerate Financial Technologies launched its OneChoice Alternative Model Portfolio in September. Aimed at hard-pressed advisors and portfolio managers, the strategy offered a quick and easy way to put together a…
SBI Group (TYO: 8473) is launching a crypto lending service through SBI VC Trade, its crypto-focused exchange subsidiary. SBI said it will initially allow customers to tender only bitcoin (BTC),…
Hippo, the home insurance unicorn, announced Tuesday an investment of $350 million from Mitsui Sumitomo Insurance Company, Limited, a subsidiary of MS&AD Insurance Group Holdings, Inc. In July, Hippo raised…
Based in Luxembourg, Astanor Ventures combines capital, technology, and sector expertise to invest in businesses that build regenerative, scalable, and nourishing food solutions. Using this philosophy, Astanor has invested in…