What Rising Rates Mean For Hedge Fund Returns After Fees

Introduction

As we continue to migrate towards a world of higher short-term interest rates, hedge  funds  and  other  active managers have the potential to capitalize on an environment of increased dispersion in global asset price movements. We have already seen hedge fund alpha begin to improve in certain areas, despite a record level of assets under management (“AUM”) in the hedge fund space.

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Hedge fund fee structures, if not aligned properly, have the potential to prevent investors from fully benefiting from increased alpha. Informed  investors  are mindful of the fact that fee structures vary across hedge funds, and there is no one agreed-upon standard for properly aligning incentives between fund managers and fund investors.  Investors  who  pay  keen  attention  to ...