Key Takeaways
- • Gotham Asset Management, a $6 billion money manager run by Joel Greenblatt and Robert Goldstein, is exploring a new fee structure for its Gotham Neutral Strategies hedge fund that ties more of its pay to performance, according to Bloomberg.
- • The proposed structure would replace the current fee arrangement with a single fee: the greater of a 1% management fee or 30% of returns above the fund's benchmark.
- • The current terms, per one of the people familiar with the matter, are a 1.5% management fee on assets plus 20% of profits, so the proposal would lower the fixed fee while raising the performance share.
- • The firm is in talks with some investors, and the report is based on two people familiar with the matter, so the terms remain unconfirmed and subject to change.
Summary
Gotham Asset Management, the $6 billion money manager run by Joel Greenblatt and Robert Goldstein, is exploring a new fee structure that would tie more of its compensation to investment performance, according to Bloomberg. The changes concern the Gotham Neutral Strategies hedge fund, and the firm is in discussions with some investors about the proposal.
According to two people familiar with the matter, the proposed arrangement would replace the fund's existing fees with a single charge: the greater of a 1% management fee or 30% of returns that exceed the fund's benchmark. One of those people said the equity fund currently charges 1.5% of assets in management fees and 20% of profits.
The structure would therefore reduce the guaranteed management fee while increasing the share of returns the manager keeps when performance beats the benchmark. Because the terms were described by people familiar with the discussions rather than in a public filing or firm statement, the final structure may differ from the one under consideration.
The discussions reflect broader pressure across the hedge fund industry for fee arrangements that more closely align manager compensation with investor results.
According to two people familiar with the matter, the proposed arrangement would replace the fund's existing fees with a single charge: the greater of a 1% management fee or 30% of returns that exceed the fund's benchmark. One of those people said the equity fund currently charges 1.5% of assets in management fees and 20% of profits.
The structure would therefore reduce the guaranteed management fee while increasing the share of returns the manager keeps when performance beats the benchmark. Because the terms were described by people familiar with the discussions rather than in a public filing or firm statement, the final structure may differ from the one under consideration.
The discussions reflect broader pressure across the hedge fund industry for fee arrangements that more closely align manager compensation with investor results.
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