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Hedge Fund Fees Push Up Revenue Share

Date: Wednesday, February 7, 2007
Author: Hedge Fund Daily

High hedge fund fees have increased the industry’s share of global management revenues, even as its percentage of the total assets remains minuscule. According to a research report from Merrill Lynch, hedge funds grabbed 28% of all revenues last year, up from 20% the year before, while its assets in the great scheme of the global financial things is just 3%. Such growth, Philip Middleton, an ML analyst, proves that hedge funds are "not just fad and fashion," according to a Financial Times interview. And it explains why investment banks are so eager to get in on the action. The latest movement in that direction came last week when Lehman Brothers made its fifth HF acquisition, with a 20% stake in Spinnaker Capital, and ABN Amro announced an investment of an estimated $325 million in a new HF launched by ABN Amro veterans, Merebis Capital. Despite the hyped image of hedge funds, Middleton had a more sober view. "Hedge funds are not really hot and funky and glamorous," he told FT. "But they provide a lot of what investors want: they are dull and worthy."