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CHART CENTRAL

Hedge funds see fee increases in 2018

The average hedge fund performance fee rose to 15.5% in 2018 from 15% in 2017, while the average management fee rose 13 basis points. The performance fee increase came after two years of little to no change and was the highest recorded average fee since 16.2% in 2012.

The 13-basis-point increase in management fees was the largest annual change in fees since Eurekahedge began collecting the data. The increase was driven by funds focused on Europe and Asia, as fees rose among those cohorts 20 and 29 basis points from 2017 to 1.3% and 1.7%, respectively. Performance fees for Europe-focused funds rose 109 basis points to 15% while Asia-focused funds saw their performance fees increase 309 basis points to 19.1%.

Data from Eurekahedge also show the proportion of funds with a performance fee of 20% or greater rose to about 55% from 45% in 2018.

The broad hedge fund market was down about 4.1% in 2018, as measured by the Eurekahedge Hedge Fund index as global public equities, measured by the MSCI ACWI, fell 11.2%. Hedge funds did have a strong 2017 and 2016, returning 8.5% and 4.8%, respectively, for an annualize three-year return of 3%.