mast image

Special Report

Impact investing

Sections

German institutions ‘to seek lower hedge fees’

Related Categories

GERMANY – German institutional investors will increasingly pressure fund of hedge fund providers to cut management and performance fees, reckons consulting firm Faros.

Since hedge funds were first legalised in January 2004, German regulator BaFin has permitted insurers and traditional German pension funds called Pensionskassen to invest 5% of their holdings in the funds, known as Dachhedgefonds, or in single hedge funds.

Dachhedgefonds have so far been the preferred vehicle for German institutions. This has been partly because these investors wish to gain familiarity with the new asset class and want to avoid the greater risk that single hedge funds carry.

Frank Umlauf, managing partner at Faros, said that another reason is that these investors “have to go the trouble and cost of performing due diligence on every single hedge they invest in.”

Faros has calculated that providers of Dachhedgefonds charge, on average, a 1.5% management fee and a performance fee of 10%.

However, Umlauf notes that as institutional investors become more experienced with hedge funds and opt more for the single variety, “they will want to negotiate lower fees for Dachhedgefonds.” Umlauf said he could not estimate how much lower the fees would go.

Jörg Sittmann, managing director of Citigroup Investment Deutschland KAG, told the Handelsblatt newspaper recently that he expected the management fee to drop to 1% soon.

So far, 20 new Dachhedgefonds and 18 single hedge funds have been approved for sale in Germany. Major providers of the former are Union Investment and DWS, Deutsche Bank’s retail fund arm.

Single hedge funds providers include Frankfurt asset management boutique Lupus alpha and, just since last week, DekaBank. Foreign hedge fund providers like Man Group have also been active in Germany.

Have your say

You must sign in to make a comment

IPE QUEST

Your first step in manager selection...

IPE Quest is a manager search facility that connects institutional investors and asset managers.

  • QN-2548

    Asset class: Fixed Income, Emerging Market Debt Hard Currency (Active).
    Asset region: Emerging Markets.
    Size: CHF 300-400m.
    Closing date: 2019-07-30.

  • QN-2549

    Asset class: Fixed Income, Emerging Market Debt Hard Currency (Passive or Passive Enhanced).
    Asset region: Emerging Markets.
    Size: CHF 300-700m.
    Closing date: 2019-07-30.

  • QN-2550

    Asset class: Fixed Income, Emerging Market Debt Local Currency (Active).
    Asset region: Emerging Markets.
    Size: CHF 250-350m.
    Closing date: 2019-07-31.

  • QN-2551

    Asset class: Fixed Income, Emerging Market Debt Local Currency (Passive or Passive Enhanced).
    Asset region: Emerging Markets.
    Size: CHF 250-350m.
    Closing date: 2019-07-31.

  • QN-2552

    Asset class: Fixed Income, High Yield (Active).
    Asset region: High Yield (US).
    Size: CHF 500-600m.
    Closing date: 2019-07-29.

  • QN-2553

    Asset class: Fixed Income, High Yield (Passive or Passive Enhanced).
    Asset region: High Yield (US).
    Size: CHF 500-1'100m.
    Closing date: 2019-07-29.

  • QN-2554

    Asset class: Global Real Estate (Equity, unlisted Funds).
    Asset region: World (ex-Switzerland).
    Size: CHF 200 mn (potential for further growth).
    Closing date: 2019-08-07.

  • QN-2555

    Asset class: Real Estate.
    Asset region: European.
    Size: EUR 50 - 100 million.
    Closing date: 2019-07-22.

  • QN-2556

    Asset class: FX Hedging.
    Asset region: Global.
    Size: Mandate size of CHF 1.5 bn.
    Closing date: 2019-08-09.

  • QN-2557

    Asset class: All/large Cap Equities.
    Asset region: China A-shares.
    Size: Unit linked platform (0m USD in initial investment).
    Closing date: 2019-08-01.

Begin Your Search Here
<