What are Hedge fund Performance Fees?
Hedge fund performance fees are a bonus payment given to a portfolio manager as a share of the profits on the fund. Though, normally such fees are illegal in the United States for any brokers.
Generally speaking the fee is calculated based on the fund’s profits earned (%), accounting for realized and potentially realized profits. They were set up as many investors generously wish to give their managers thanks for helping them make money. In many cases such performance fees can be very substantial. The general rate for a performance fee is twenty percent, but it can go higher with talented managers and lower with newcomers or novice ones.