Pictet removes fee on European hedge fund

Pictet has removed the redemption fee on its European hedge fund, forming part of a trend in its industry to reduce or remove charges completely

Pictet removed completely the redemption fee on its Corto European fund, which had €212m in it last April, when the Swiss-based manager launched an onshore variant of the portfolio.

A spokeswoman from the group confirmed the change, but noted the fund’s investors were long-term in nature, so had not suffered paying the fee in practice.

The change is but one variation in the $1.8trn industry of the prevailing trend to reduce levies, primarily those based on assets and performance.

NewSmith Japan New Horizons, Siebels Hard Asset, Old Mutual Statistical Arbitrage, Culross Arbitrage Segregated, Strategic Global and GAM Star Composite Absolute Return funds are among those that removed or reduced various charges over the past six months. GAM and Charlemagne Capital also reduced charges on various long/short portfolios.

Separately, GAM recently improved dealing terms on various funds, NewSmith Capital Partners removed a gating provision, and Culross almost halved the redemption period on its portfolio.

Corto European improving its charging structure does not support the contention of practitioners that it is primarily poorly performing funds that have done so since the credit crunch.

The fund easily outperformed its industry’s 18% loss in 2008, one investor said, and the 46% plunge by European shares.

When the industry performed well, investors in it broadly accepted the charging of 2% of assets plus 20% of fresh gains. However, since registering its worst year on record in 2008, the average charges have fallen to 1.65% and 18.89%, according to researcher Preqin. Only 38% of managers still charge the ‘2% and 20%’ levels.

European funds overall charge 1.6% and 18.2%. This is less than American portfolios (1.7% and 19.1%), but more than Asian managers (1.5% and 19.3%).

David Walker

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