(Bloomberg) — Man Group Plc has begun charging clients of its emerging multi-strategy hedge funds pass-through fees covering compensation and other expenses, a move favored by peers such as Millennium Management and Citadel.
Man Group, the world’s largest listed hedge fund company, will start charging a pass-through fee on new capital invested in Man Strategy 1783 from this month, documents show.
Such fee structures have become increasingly popular among multi-strategy funds, which have the resources to recruit and onboard traders and invest in technology and infrastructure. Investors are often willing to pay the extra cash because they are eager to sign up with firms that have teams of portfolio managers that can generate steady returns.
A spokesman for London-based Man Group, which manages about $178 billion in assets, declined to comment.
Man Strategies 1783 was launched in 2020 and is named after the year the firm was founded. The fund, managed by Greg Bond, head of Man Group Americas, has grown to $1.5 billion under management.
The fund can allocate its money among about 70 in-house strategies, including discretionary and computer-driven pools, according to investor documents seen by Bloomberg.
Multistrat typically distributes funds among dozens or even hundreds of semi-independent trading teams, also known as “pods,” that make bets across a variety of asset classes and markets. Pass-through fees were originally intended to cover the direct costs associated with those teams, including their share of trading proceeds.
New investors in Man Strategies 1783 will pay a pass-through fee covering performance pay and recruitment costs, as well as an annual management fee and performance fee of 2% of net assets and 20% of profits, respectively. Existing investors will only pay a management fee and a performance fee.
While Man Group only passes on compensation costs, which typically amount to 3% to 10% of net assets, other multi-strategy managers charge clients a wider range of fees, raising concerns among some institutional investors that the firms have little incentive to be frugal.
For more stories like this, visit bloomberg.com
Follow us On Social Media Google News and Twitter/X