Is it likely for hedge fund fees to come down? Scott Frush grapples with these and more questions in ‘Hedge Funds Demystified’ (www.tatamcgrawhill.com). He is of the view that the issue is not ‘if’ but ‘when’ hedge fund fees will decline overall. Asset-based fees are most likely to remain largely intact and untouched, but performance-incentive fees will see pressure owing to two primary factors, Frush foresees. The first factor is that with so many new hedge funds being established, managers will reduce their rates from the typical 20 per cent of profits. Second, with many institutional investors increasing their allocations to hedge funds, pressure to reduce rates will increase, he adds. “These institutions will swap capital invested for a reduced rate – a quantity discount of sorts.” Another prediction of the author is that soon hedge fund investors will be able to hold index-based derivatives, now in their infancy. “In addition, hedge fund indices themselves will improve because there is a concerted effort by data providers and hedge fund managers to provide the best data possible to construct acceptable indices.”   more »