One in three hedge fund managers charge between 1.5% and 1.99% in management fees, while 36% charge the once-standard 2%, according to the results of a survey of hedge fund and fund-of-funds managers by Preqin Hedge.
The mean management fee for the sample Preqin surveyed was 1.63%.
Four percent of managers surveyed charge more than 2%; 24% have a management fee of 1% to 1.49%; and 3% charge less than 1%.
Average hedge fund management fees vary widely by investment, according to an analysis of the survey results. Commodity trading advisers charge the largest average management fee, at 2.17%, while hedge funds of funds have the lowest average fee, 1.26%.
Relative value and global macro both charge an average fee of 1.67%, while multistrategy hedge fund managers charge an average of 1.55%.
Hedge fund performance fees are much closer to the accepted industry standard of 20%, Preqin Hedge researcher Richard Wells wrote in the report. Sixty-nine percent of hedge funds charge a 20% performance fee, while 3% charge more than 20%. Roughly 20% ask for performance fees between 10% and 19.9%, while 8% charge less than 10%.