3 ms·
Hedge fund fees have been in a steady decline. > The notion that hedge funds all collect a stereotypical management fee of 2 percent and a performance fee of 2
by gizmo 10y ago
Hedge fund fees have been in a steady decline.
> The notion that hedge funds all collect a stereotypical management fee of 2 percent and a performance fee of 20 percent has been dying a slow death in recent years, especially for smaller, newer funds.
https://www.bloomberg.com/view/articles/2015-10-27/hedge-fund-performance-fees-are-shrinking https://www.bloomberg.com/view/articles/2015-10-27/hedge-fun...
Buffet's bet went into effect in January of 2008, so before the crash.
- tptacek 10y agoIf you re-read the letter, you'll see it ran through the entire crash, and hasn't ended yet.
- gizmo 10y agoI said 2/20 fees aren't the norm anymore. You quoted from the letter. I provided a source that shows hedge fund fees are going down and remarked that the Buffett bet started before the 2008 crash when fees were higher then they are now. Because it was a boom period and because index funds that push down management fees have only recently become popular.
- tptacek 10y agoIt seems to be that either Buffett must be mistaken or you are, right? His claim is that the funds involved in the bet are 2/20 funds, and while the bet started in 2008, it is still running today.
- gizmo 10y agoTechnically, he claims they pay less than 2/20 but no details are provided. Nowadays 2/20 fees are considered high, not the norm. Fees are trending down. This is something you can easily verify. Buffett did say 2/20 is the "prevailing hedge-fund standard" but he's mistaken.
- tptacek 10y agoI guess. Mostly, I've just been nerdsniped by the claim you made that the timing of the bet could invalidate it's claim. It's a 10-year bet, so Buffett has in fact maximized his exposure to the phenomenon you describe.