Reuters – Funds using a hedge fund banner to charge higher fees while only betting on India’s rising stock market are likely to come under the spotlight at a conference in Geneva later this month.
About 20 hedge funds focus purely on India and about another 700 funds concentrate on Asia Pacific, according to data provider HedgeFund Intelligence.
“Over the last three years, most so-called hedge funds have been sitting long … It’s shocking how many have underperformed the market,” one investor with Indian hedge fund investments said.
India’s stock market has been on a three-year bull run but prices have tumbled around 20 percent since a May 11 peak. The general upward trend is expected to resume, albeit with more volatility.
Hedge funds can typically charge annual management fees of between 1 and 2 percent and up to 20 percent of any outperformance of pre-set targets such as money market rates.
In contrast, traditional fund managers can sometimes barely muster half a percentage point of management fees and rarely charge performance fees.
