Those brave enough to join the fray are finding a less lucrative business than in the past. Investors continue to drive down the fees they’re willing to pay for the dubious privilege of handing cash to hedge funds. The halcyon days of “Two-and-Twenty” — 2% of the total assets being absorbed as a levy, as well as 20% of any gains — are truly over for the industry as a whole. In the second quarter, the industry’s average management fee dropped to 1.37%, while incentive fees declined to 16.37%, both reaching record lows, according to HFR’s figures.

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