Howard Wang, 28, isn't charging a performance fee for his new global macro fund Convoy Investments LLC, $4 Instead, he'll charge only a 1.25% management fee.
It's definitely an interesting approach to attract investors.
Fund managers are paid through a compensation structure commonly known as the "2 and 20," which stands for a 2% management fee and a 20% performance fee charge.
More specifically, "2 and 20" means a hedge fund manager would charge investors 2% of total assets under management and 20% of any profits. While "2 and 20" is the standard in the industry ($4), those numbers can vary from fund to fund. Steve Cohen's SAC Capital, for example, $4 and Jim Simons $4.
Lately, it's become harder for fund managers to justify the fee structure, especially because most funds have been underperforming the broader market.
Wang opened his macro fund back in November, and his fund was up 10% this year through June. That's solid performance, because $4.
Right now, it only manages employee and friend/family capital but he's looking to raise $200 million, the report said.
Let's see if Wang starts a trend.