Two-and-20 cedes way to no fees upfront as hedge funds adapt

SINGAPORE (March 24): Three Asian hedge fund startups are eschewing the industry’s traditional fee model, as they vie for capital from investors that have gotten increasingly reluctant to put money with unproven managers.

Kit Trading Fund, Noviscient and Gordian Capital Singapore, all based in Singapore, are among firms that are starting to do away with the 2% management fee and 20% of all profits -- also known as the 2-and-20 model.

Noviscient plans to start a fund that will charge investors no management fees and will absorb the first 5% of annual investment losses, moves almost unheard of in an industry known for levying the highest fees in the money management business. Gordian will take a performance fee only if returns exceed a certain benchmark. Kit Trading also has lower-than-average fees, while insulating clients from some declines.

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