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Understanding the HBRD fund fees and “water mark”
Main Post:
Hi, I’d like to but into HBRD (BetaShares Active Australian Hybrids Fund) but I’m having trouble understanding some terms.
Here is a link to the fund site
https://www.betashares.com.au/fund/active-australian-hybrids-fund/
The first is that their is an associated performance fee of 15.5% of the Fund’s performance above the performance benchmark. Ok fine. The PDS goes on to say “a performance fee is payable, provided the Fund’s NAV per Unit as at the end of the quarter exceeds the applicable high water mark” I can’t find a definition of what this high water mark is and am struggling to understand this performance fee clearly.
The other issue is this fund has a management fee of 0,55% p.a and transactional and operational costs of 0.28% p.a. (But net transactional and operational costs are 0.15% p.a. So adding the management fee and the net operational and transactional cost I have 0.55+0.15 = 0.7%. Now they’ve reported portfolio gross yield as 3.52% and net yield of 2.56% this difference is greater than 0.7%. Where is the difference?
Thanks
Top Comment:
IMO the fund is too expensive given that the maximum yield you can achieve is about 350bps
Mark Spitznagel Universa Fund - Hedging Risk For Noobs
Main Post:
I recently came across an article about the Universa Fund of Martin Spitznagel which you can find here: Reddit Post
Here you can see the performance of the fund: Returns
Basically it is recommended to keep only 3.3% of your portfolio in Universa and the rest for example in SPY, all that the fund does based on the available info is buying deep OTM puts and long Vol. to hedge against events like the one we saw unfolding in the last weeks. Sadly it looks like the fund has a $25 mio. minimum investment.
Having 96.7% of your investments in SPY and 3.3% in OTM SPY puts and long VOL options seems like an ideal portfolio for me that combines the best of both worlds. You would profit from the big diversification and relatively safety of an ETF tracking the S&P 500 as well as exponential WSB YOLO returns (at least on your 3.3%) in times of market downturns like we have currently that would protect your assets and let you sleep well no matter how bad it looks.
So what would be the best way to replicate that fund?
Top Comment:
Surprised by the lack of replies..
Mark Mobius returns with fund launch
Main Post:
https://www.fnlondon.com/articles/mark-mobius-returns-with-fund-launch-20180220?link=mktw
Top Comment:
Mobius looks like an old-school Bond villain.
Don’t expect Mark Cuban to fund Archie Miller’s buyout
Main Post: Don’t expect Mark Cuban to fund Archie Miller’s buyout
Top Comment:
Who the fuck even floats that idea in the first place? The buyout will not prevent the AD from making any moves. It’s not like they fire Archie and send him out the door with a $10M check. It’s not a lump sum payout. And it’s offset by his earnings from his next job.
Mark Cuban is ready to fund a TikTok alternative built on Bluesky's AT Protocol | TechCrunch
Main Post: Mark Cuban is ready to fund a TikTok alternative built on Bluesky's AT Protocol | TechCrunch
Top Comment: The only future of sane social media seems to be on open protocols like Bluesky where algorithms can’t be hijacked by the ruling class..
Astonishing Mutual Fund Returns - Fidelity Global Innovators
Main Post:
I know past performance isn't indicative of future returns, and I'm an ETF index fund investor, but I think sometimes it's still fun to look and appreciate the returns of actively managed funds.
Check out the Fidelity Global Innovators returns since its inception 3 years ago. Super impressive, and I'm sure much of it luck, but nonethless incredible growth. Mark Schmehl seems to have a pretty good knack for current markets (whatever that means). He also runs the Fidelity Special Situations fund which has been around much longer. Not sure how long he's been in charge of that one though.
Performance:
YTD - 90.00%
1-Year - 96.40%
3-Year - 36.01% (annualized)
https://www.morningstar.ca/ca/report/fund/performance.aspx?t=0P0001C8AE
Top Comment: It’s literally been around for 3 years. It’s all high growth tech stocks like zoom and Tesla.
Hedge fund fees and investor return question
Main Post:
A hedge fund has the following fee structure:
Annual management fee based on year-end AUM 2% Incentive fee 20% Hurdle rate before incentive fee collection starts4% Current high-water mark$610 million
Q. The fund has a value of $583.1 million at the beginning of the year. After one year, it has a value of $642 million before fees. The net return to an investor for this year is closest to:
- 6.72%.
- 6.80%.
- 7.64%.
C is correct. The management fee for the year is$642 × 0.02 = $12.84 million.
Because the ending value exceeds the high-water mark, the hedge fund can collect an incentive fee. The incentive fee is{$642 – [$610 × (1 + 0.04)]} × 0.20 = $1.52 million.
The net return to the investor for the year is[($642 – $12.84 – $1.52)/$583.1] – 1 ≈ 0.07638 ≈ 7.64%.
So I follow the answer explanation up until the incentive fee. It states that the hurdle rate starts at 4%, but AUM of 642M minus the 2% fee of 12/84 = 629.16M left. This number is over the high-water mark. But 629.16M - 610M = 19.16M of "new" profits.
If you take 19.16M and divide by 610M = 3.14% which is lower than the hurdle rate. Or is the hurdle rate based on something else?
Top Comment: I actually went through this yesterday. You have to be extremely mindful of the wording in the question & how the fees are calculated (net, gross, etc). Do these types of questions in steps. Year End AUM: $642M Management Fee: $642M x 2% = $12.84M High water mark = $610M + Hurdle rate of 4%.. What this means is that in order for the hedge fund manager to collect an incentive fee, the year-end portfolio AUM must total more than $610M + 4% = $634.4M. Basically, the only way the hedge fund manager is allowed to charge an incentive fee is if the total year end AUM is above $634.4M Since the question assumes that the Incentive fee is charged independently of the management fee, you would take Year end balance - high water mark + hurdle rate = ($642M - $634.4M) x 20% = $1.52M Total hedge fund fees = $12.84M + $1.52M = $14.36M Total Investor Return = $642M - $14.36M - $583.1M / $583.1M = 7.638% Hope this helps bud.