*This blog entry will be a temporary departure from our usual layman investor approach*
Vikram Pandit talked about a new reality for Citi, and here is the new reality for hedge funds--investors with bloated wallets will no longer line up and swallow your 2 and 20.
Anyone harboring ambitions of launching their own hedge fund really needs to read this. That's the blueprint for hedge fund fee structures going forward. The driving force behind this is the hugely influential Larry Powell, formerly from the Texas Teacher Retirement System, and now the head of the Utah Retirement System. The industry is changing, LP passivity will diminish considerably and fees will be scrutinized more vigorously.
Given the cynicism currently levelled at hedge funds and the inability of the industry to deliver alpha and absolute returns when they were most needed in 2008, this I promise you, is no stretch of imagination.
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