some historical context...the problem is that the 2 in the 2 and 20 hasn't come down as asset gathering exploded.
When hedge funds first started the pools of capital were much smaller, and the management fee was there to keep the lights on, and provide the cash flow stability to pay top people etc. (essentially cover overhead). As AUM exploded, especially at the largest funds, management fees became a profit center...this has changed a lot of incentives...
When hedge funds first started the pools of capital were much smaller, and the management fee was there to keep the lights on, and provide the cash flow stability to pay top people etc. (essentially cover overhead). As AUM exploded, especially at the largest funds, management fees became a profit center...this has changed a lot of incentives...