The New York-based firm, one of the industry’s best-known with $ 14 billion in assets, said in a letter to investors reviewed by The Wall Street Journal that it would cut the management fee on its $ 7.5 billion Macro Managers fund to 2.5% from 3%. The move is “a reflection of our sensitivity to changes in the industry as a whole,” the firm said in the letter.
The cut, which will come into effect from January, comes near the end of a tough year for the Macro Managers fund. After large losses in January and February, the fund is down 3.8% in the first 10 months of the year.
The fund “has experienced a disappointing negative return year-to-date,” Bacon wrote in the letter. Hedge funds on average are up 3.6% to the end of October, according to Chicago-based data group HFR.
A spokesman for Moore Capital declined to comment.
The move comes as hedge funds face mounting pressure to lower the amount they charge investors in the face of diminishing returns.
In September, the Journal reported that Brevan Howard Asset Management, one of the world’s biggest funds, planned to charge 0% management fees for some investors.
Hedge funds have typically charged investors a 2% management fee and a 20% performance fee, with some superstar managers able to bill more. But that model has been under pressure.
Moore Capital’s Bacon said he was “for the first time in several years exceedingly upbeat about the game-changing trading opportunities that lie ahead”.
“By reducing the management fee, we hope to maintain a stable asset base to capitalise on the many trading opportunities in the current environment,” he said.
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This article was published by The Wall Street Journal