Equity fees sweeten the deals

Mon Nov 1, 2004

As the dust settles on JPMorgan's purchase of a controlling stake in Highbridge, and as attention switches to Lehman Brothers and GLG, it is becoming clear that there is more to the decision by big investment banks to buy into hedge funds than meets the eye. The obvious attraction for banks is the chance to offer their clients quality hedge fund products that they would struggle to build internally.

However, the big banks may be less willing to admit that another factor drawing them into hedge fund purchases is the desire to boost their fee income - and not just from performance fees earned by the funds - but also from the huge commissions paid by hedge funds to the investment banks.

While the traditional investment institutions are squeezing the banks on their equity commissions, many of the bigger hedge funds actively seek to pay top dollar because they want to get...

ISSN: 2151-1845 / CDC10004H

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