In an environment where performance has been challenging, the mainstream media continues to ramp up its negative rhetoric about the future of alternative investments. The gist of it seems to be that the 2/20 fee model is not generating the requisite value and that the day of reckoning is nigh.
Like many things, CitcoOne began with an innocuous question. It was time to refresh the web portal and universal opinion within Citco was that the next version needed to deliver more data. But when we talked to clients about what they wanted, they talked more about outcomes, such as transparency, insight and user experience. All these discussions coalesced into one when a client asked: “But how can you make it simple?”
It’s no secret that because of declining assets and pressure on fees from institutional investors, fund of hedge fund managers’ margins are being squeezed. But as they respond by seeking to cut operating costs, they’re being forced to rely on third-party administrators far more than before, putting trust at a premium.
Many co-investments, direct investments and managed accounts can be considered shadow capital. Instead of allocating to a blind pool, shadow capital investors negotiate bespoke terms and lower fees – and they can have a say in what investments a fund makes.
