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Hedge funds charged $1.8 trillion in fees since 1969

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Largest most expensive hedge funds share more winnings

with

investors

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Group as a whole keeps roughly half of their gains

By Nell Mackenzie

LONDON, Jan 20 (Reuters) - Hedge funds have charged

their investors $1.8 trillion in fees from 1969 to the end of

December 2024, according to data from hedge fund investor LCH

Investments on Monday.

Over the past 55 years, hedge funds have kept roughly half

of the money they make from trading profits, according to LCH

Investments, an investor in hedge funds which is part of Edmond

de Rothschild.

The top twenty performing hedge funds charge higher

fees, but deliver better returns and have fewer outflows, the

report said. This group took less, around 34.3% of their gains

before fees over this period, according to the data.

"When hedge funds make losses, the performance fee paid on

the way up is not refunded. So if the fund then closes down, or

investors redeem before the fund recovers the losses, investors

end up incurring disproportionately high fees," said Rick

Sopher, chairman of LCH Investments on a phone call with

Reuters.

Last year, 326 hedge funds closed in the first three

quarters, according to hedge fund research firm HFR.

Smaller managers struggle to recover poor performance and

investor outflows over time as losses one year must be made up

the next.

"What comes out of our research is that the fees paid by

investors as a proportion of hedge fund gains are very high,"

said Brad Amiee, head of research at LCH Investments.

The top 20 best performing hedge fund managers returned

$93.7 billion net of fees in 2024, said the report.

Multi-strategy hedge fund, D.E. Shaw, saw its best year ever

on this list, returning the highest amount, $11.1 billion, to

investors after fees, said LCH.

British hedge fund Marshall Wace posted its first appearance

in the top twenty, returning $4.5 billion to its investors.

D.E. Shaw and Marshall Wace declined to comment.

Sopher said that LCH as a fund would close sometime later

this year but that Edmond de Rothschild would continue to invest

in hedge funds through other funds within the Group.

LCH, the world's first fund of hedge funds, was founded in

1969 and returned an average of roughly 10% a year since

inception.