Understanding Hedge Fund Fees: Implications for Hedge Fund Managers

K&L GATES BENEFITS OF TIERED MANAGEMENT FEES Tiered management fees encourage investors to make larger investments or let their assets grow in the fund to take advantage of lower management fee rates available at certain investment thresholds. Is it fair for investors? Primary benefit of offering a tiered management fee structure is attracting capital and addressing the concerns of institutional investors. ■ The first question for managers contemplating a tiered management fee is what the fund's break-even point is. Where a tiered management fee provision is complex, managers should consider including an example with the description of the tiered structure, so investors really understand how the management fee will be charged. klgates.com 10 10

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