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Hedge fund managers paid too much, says hedge fund manager

Date: Thursday, June 28, 2012
Author: Harriet Agnew, Financial News

Manny Roman, the chief operating officer at Man Group, has said that hedge fund managers are paid too much.

Speaking at Fund Forum in Monaco yesterday, Roman said from a social standpoint "of course hedge fund managers get paid too much [and] one cannot justify [the levels] in finance versus other jobs", according to trade magazine Investment Europe.

Roman, who was chief executive at GLG Partners when it was acquired by Man Group in 2010, and is now an executive director on the board of Europe's largest hedge fund manager. He said it was "hard to argue" against higher inheritance taxes to "share more broadly and there will be transfer policy from people who have been lucky in life - such as hedge fund managers - versus those who have been unlucky".

Hedge fund pay comes from the fees that are charged on their funds, typically a management fee of 2% of assets and a 20% performance fee. According to Investment Europe, Roman said that investors would continue paying hedge fund fees, substantially higher than their long-only counterparts, as long as their funds could deliver "10% to 12% net", whereupon there was "little pricing pressure".

Roman said: "The moment you stopped delivering good risk-adjusted returns people would ask what am I paying for?"

Over the past three years, the average hedge fund gained 19.98% in 2009, 10.25% in 2010, lost 5.25% in 2011 and is up 1.86% in the first five months of this year, according to Hedge Fund Research.

In a wide-ranging talk, Roman also touched upon Lehman Brothers' bankruptcy, the eurozone crisis, increased regulation and industry consolidation, Investment Europe reported. He left the audience with an investment tip: Bordeaux vintage 2009, "the best vintage in Bordeaux since 1961".

To read the full Investment Europe article, click here [ http://bit.ly/NQeY64 ]

--Write to harriet.agnew@dowjones.com