Hedge fund fees fell 21% in 2004 as returns drop

March 23 | Updated: Mar 24 2005, 06:20am hrs
Hedge fund managers worldwide earned $44.8 billion of fees last year, down 21% from a record in 2003, as investment returns worsened, according to estimates by UBS AG.

The fees earned by hedge funds were $2.8 billion more than those made by managers of US mutual funds, who oversee almost seven times as much assets, said UBS analyst Alexander Ineichen, who oversees the Zurich-based banks alternative investments research group.

The returns of hedge funds were lower in 2004, hence the performance fee is lower, Mr Ineichen said on Wednesday. Still, the global hedge funds industry is generating more fees than the much larger US mutual fund industry.

Wall Street traders, including Eric Mindich and Dinakar Singh of Goldman Sachs Group Inc, have started their own hedge funds during the past year to benefit from the record amounts of money thats being steered to the loosely regulated investment portfolios.