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Forbes highlight ideas including new and inventive fee structures for hedge funds to the $23T of insurance assets that firms like Apollo and Blackstone are eyeing to the fact that the equity slide of the American economy is increasingly being owned by private equity and not public investors.
How can one spend $50 million to build a quant specialty if LPs could abandon them a year later? Feldstein’s solution: Offer big institutional investors lower fees – goodbye 2 & 20 – for longer term five-to-seven-year lockups. In this format, the LP would be investing with a long enough duration that the fund would would have the confidence to invest in its own alpha-hunting business. What Feldstein articulated was changing fee structures so that LPs looked at their investments as a mutual partnership. Their committed long-term capital could help generate “network effects” of knowledge - and alpha -- that flows back into their pockets. Think of management fees, or performance fees, as a direct investment in the fund
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