Key Takeaways
- • Gotham Asset Management, a $6 billion money manager run by Joel Greenblatt and Robert Goldstein, is exploring a new fee structure for its Gotham Neutral Strategies hedge fund, according to Bloomberg.
- • The proposed structure would replace the current arrangement with a single fee: the greater of a 1 percent management fee or 30 percent of returns exceeding the fund's benchmark.
- • The existing terms for the equity fund are 1.5 percent of assets in management fees plus 20 percent of profits, according to one of two people familiar with the matter.
- • The talks are at an early stage with some investors, and the report does not indicate that the new terms have been finalized.
Summary
Gotham Asset Management, the $6 billion money manager run by Joel Greenblatt and Robert Goldstein, is exploring a revised fee structure that would tie more of its compensation to investment performance, according to Bloomberg. The firm is in discussions with some investors about its Gotham Neutral Strategies hedge fund.
Under the proposal under discussion, the firm would charge a single fee equal to the greater of a 1 percent management fee or 30 percent of returns that exceed the fund's benchmark, according to two people familiar with the matter. This would replace the fund's current structure, which charges 1.5 percent of assets in management fees and 20 percent of profits, one of the people said.
The change would lower the fixed management fee component while increasing the performance-based share of gains above the benchmark. Because the proposal is described as a single fee with a floor, the fund's fee load would depend on both asset levels and the spread between returns and the benchmark. The report does not specify the timing of any change or whether investors have agreed to the terms.
The discussions reflect broader pressure across the hedge fund industry for fee structures that align manager pay more closely with investor outcomes.
Under the proposal under discussion, the firm would charge a single fee equal to the greater of a 1 percent management fee or 30 percent of returns that exceed the fund's benchmark, according to two people familiar with the matter. This would replace the fund's current structure, which charges 1.5 percent of assets in management fees and 20 percent of profits, one of the people said.
The change would lower the fixed management fee component while increasing the performance-based share of gains above the benchmark. Because the proposal is described as a single fee with a floor, the fund's fee load would depend on both asset levels and the spread between returns and the benchmark. The report does not specify the timing of any change or whether investors have agreed to the terms.
The discussions reflect broader pressure across the hedge fund industry for fee structures that align manager pay more closely with investor outcomes.
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