Feesibility
One of the first topics that people tend to inquire about when discussing alternative investments is some reference to their charging “high fees”
One of the first topics that people tend to inquire about when discussing alternative investments is some reference to their charging “high fees”
"Experience is a good school. But the fees are high.” -Heinrich Heine
As Mr. Heine points out, experience can be expensive, whether it’s earned via the school of hard knocks or obtained by paying others for the skillsets they bring to the table. One of the first topics that people tend to inquire about when discussing alternative investments is some reference to their charging “high fees” – especially as it relates to hedge funds or private equity funds. However, it is also vital to compare various fees of investments fairly, considering what experience/skillsets we are paying for, how the fee structure aligns managers’ interests with those of their investors, and what we should expect in return. As with many other purchases we make, the fee discussion surrounding alts is ultimately a weighing of cost vs. (expected) value. But to make an informed decision, we first need to understand typical fee structures and their application – a “feesibility” study, if you will. Here we go…
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