Hedge funds face serious trimming

Yup, pretty much, except I don't think AuM is quite down by half.

Here's where I saw it a month ago.

"- hedge funds - I think that the picture looks something like the following but would welcome a debate:
* the number that I see quoted in the press for peak assets under management industry-wide is $1.9 trillion in mid 2008. At 2% management fee, that was $38 billion of management company revenue
* to make the math simple, I'll assume a 12% return before fees in a decent recent year (someone can no doubt help us out with some actual CS/Tremont index data). That's 10% after management fee, yielding a 2% performance fee assuming a 2 and 20 fee structure. That 2% performance fee is another $38 billion, implying peak industry revenues of $76 billion (in reality more or less depending on performance above or below the 12% assumption).
* I believe I saw a report recently that hedge funds ended Q109 at about $1.3 trillion under management, implying $26 billion of management fee revenue. The reality will be less than that because of funds that have waived management fees to palcate investors and keep them from bolting. With most funds well under their high water marks, industry aggregate performance fees will be small, but some funds are performing, so they will be greater than zero
* $26 billion less waived management fee plus performance fees (for the performers) equals, what, $25-30 billion? Down by two thirds, from peak, give or take
* now consider the cost base of the hedge fund industry - rent, data, IT, admin overhead, etc. adding up to God knows how many billions. This cost base can't fall two thirds in a year or two, so the operating leverage from fixed costs levers the main variable cost item, comp, down even faster. The slow motion train wreck that is the resizing of the hedge fund industry has a long way to go."
http://www.streeteasy.com/nyc/talk/discussion/10497-nyt-after-an-off-year-wall-street-pay-is-bouncing-back

yeh.. but ericho75 said that the Bodega owner's cousin who shines shoes on Wall Street knows another shoe shiner at Goldman Sachs, who overheard the janitor there say that a guy in a suit who he thinks is a VP said bonus maybe or will be better.... but the the janitor is hard of hearing and the VP could have actually been saying "ericho75 said ISM is up" therefore bonus will be better...

"Yup, pretty much, except I don't think AuM is quite down by half."

Did you check the article?

> Frightened investors bolted, yanking out $253 billion in the six months ended March 31, 2009,
> driving hedge fund assets to $1.3 trillion—roughly half of last year's peak.

It is not necessarily AuM that have been pulled -- the values have just dropped...

Did I check the article? 10022, did YOU check the article?

It quotes Sanford Bernstein research claiming $2.2trn in 2008, so the current $1.3trn is down 40%. The msot widely reported (= most credible?) source is Hedge Fund Research. They were at $1.9trn at the peak (see link below), so the decline is 30%. The reporter says "roughly half", but I don't usually count on journalists to do my arithmetic for me.

http://www.hedgefundresearch.com/pdf/pr_20090421.pdf

and by the way, w67, lol

> The msot widely reported (= most credible?) source is Hedge Fund Research. They were at $1.9trn at
> the peak (see link below), so the decline is 30%

You'd need to pull their current calculation as well, mixing a numerator and denominator from two sources with different amounts isn't great math either.

> It is not necessarily AuM that have been pulled -- the values have just dropped...

Its both... lots of reports of massive redemptions.