Are hedge funds' reported performance before fees or after fees?

Discussion in 'Professional Trading' started by learner88, Jan 5, 2019.

  1. Hedge funds' poor performance have been reported throughout the financial news recently. Not gloating over them because I did poorly myself.

    I would like to know if these hedge funds' performance reported on the news are by default before fees or after fees? If it is after fees (including both management and performance fees), the actual performance may not look as bad as reported since hedge funds' fees are really high. 2 and 20 can chop off substantial part of the actual performance.
    murray t turtle likes this.
  2. MattZ

    MattZ Sponsor

    I believe that by law all funds must report fees net of all fees. For example, a similar asset class, the Managed Futures industry where you have licensed CTAs, should report performance net of all fees: Commissions, management and incentive.
  3. Robert Morse

    Robert Morse Sponsor

    MattZ is correct. The Standard if after management and incentive fees. Some Hedge funds have more than one tier so they typically say on their tear sheet and disclosure documents. In this case, the number "1" is explained in great detail lower down including T-bill hurdles, High Water Marks, that some early investors pay different fees and some like the GP pay none.

    e.g. upload_2019-1-6_5-12-46.png
  4. If you want to impress your institutional client base, you report both:gross and net-of-fees income. Thus, you are more transparent than you should be. But it gives you in bad times (the ones you are not gloating about) at least "one argument"...;=)

    What´s the strategy of your fund and you are beating HFR benchmarks?
  5. %%
    Both ways;
    not that any should invest off a news report.:cool::cool:
  6. TommyR


    Before i blew up punting_account_16.1, she was clocking well above HFR. Would i also be elligible for institutional client money or would they be unimpressed?