For some hedge funds, a cash hurdle is seen as an olive branch to antsy investors frustrated by dwindling returns. For others, such as the $3 billion hedge-fund platform Crestline Summit, it is a part of their expansion plans.
There's alignment with forward-thinking LPs who don't want to put the portfolio managers or the fund managers in such a position that they don't make money," said Caroline Cooley, Crestline Summit's chief investment officer.
There is a give-and-take where we're not going to charge on the interest-rate component of the return, but we will charge a higher rate for the alpha component of the return.
Cash hurdles are expected to be more common thanks to higher interest rates and vocal allocators such as the Teacher Retirement System of Texas, which led a group of dozens of investors to call for such fee agreements.
Collection
[
|
...
]