Fees are now being driven down as investors become

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"Fees are now being driven down as investors become more powerful in the manager/client relationship. US pension funds such as Calpers and the Utah Retirement System have been vocal in their belief that the hedge fund remittance structure needs to evolve." Calpers is California's state employee retirement scheme and the US's biggest pension fund, with $180bn under management and more than $6bn in hedge funds. Joe Dear, Calpers' chief investment officer, says the fund has had "extensive discussions" with 26 hedge funds and nine funds of hedge funds over fees, notably annual management fees, as well as about the transparency of holdings and reporting positions. "It is most important to get a better alignment of interests [between managers and investors]," he says. "It is aggravating when a manager profits on a fund that loses us money." As one hedge fund manager says, "Calpers has the clout" to force managers to cut fees. But smaller investors are also negotiating. In a report this year, Casey Quirk, the consultancy group, estimated that over the next four years $252bn would be allocated to hedge funds by US pension funds alone, a sharp increase in pension funds' traditional allocations.
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