It was neither a cold day in July nor had hell frozen over when AJO LP, aka Aronson Johnson Ortiz, opened its first hedge fund in early January.
“I know, I know ... I have spent so much time trashing hedge funds. I acknowledge the irony,” said Theodore R. Aronson, managing partner and a portfolio manager at the Philadelphia-based quantitative equity manager, which manages $21.3 billion.
But Arup K. Datta, partner and chief investment officer, international, who joined the firm last June with a mission to diversify the domestic equity specialist's investment spectrum, included a hedge fund in the first three international strategies developed by his Boston-based team.
The AJO Emerging Markets Long/Short Fund opened with $10 million of AJO partner capital seed money, Mr. Aronson said. One of Mr. Aronson's primary arguments against hedge funds has been the high fees. But the new AJO international hedge fund is offering significant fee discounts for institutional investors who opt in before the fund reaches the $100 million mark.
Investors pay a 0.75% management fee and a 7.5% performance fee if they invest before the fund hits the $50 million mark, and 1% management fee and 10% performance fee when the fund's assets are between $51 million and $100 million. After the fund's assets top $100 million, fees will still be lower than the industry standard, with a 1.5% management fee and 15% performance fee. — CHRISTINE WILLIAMSON
This article originally appeared in the February 18, 2013 print issue as, "Manager who doesn't like hedge funds opens one".