"If I can buy four yachts from my investments, why should I care if my manager can buy one for himself?"
This quote, from an investor in hedge funds, encompasses the argument for the much-pilloried incentive fee hedge funds levy, usually set at 20% of profits. Hedge fund managers are frequently attacked as overpaid and greedy, mainly on the basis of this structure. But it is a key pillar in their contention their interests are aligned with investors in a way their long-only peers are not. When it comes to fees, the migration of some practices initiated by hedge funds might be welcomed by long-only investors. Many hedge funds, and some long-only managers, may only collect incentive cha...
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