CFA Level 1 | Alternative Investments: Hedge Fund Fees

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    CFA Level 1
    Topic: Alternative Investments
    Reading: Introduction to Alternative Investments
    Management fees can be computed based on:
    a percentage of beginning market value/AUM
    a percentage of ending market value/AUM
    Incentive fees can be computed based on:
    a percentage of gain (independent of management fees)
    a percentage of gain (net of management fees)
    a percentage of gain in excess of hurdle rate (hard hurdle rate)
    a percentage of gain (soft hurdle rate)
    For more information on CFA exam prep, check www.noesis.edu.sg/programme/cfa

ความคิดเห็น • 43

  • @lucatintor4896
    @lucatintor4896 2 ปีที่แล้ว +5

    Dear Fabian, I am not an academic but I work on hedge funds accounting side and portfolio performance side, I look after also management and incentive fees.
    Your exposition is absolutely outstanding, well done.

    • @FabianMoa
      @FabianMoa  2 ปีที่แล้ว

      Thanks for the feedback, Luca! Appreciate it

  • @mohammedessam7082
    @mohammedessam7082 3 ปีที่แล้ว +7

    Truly wished you explain a scenario which presents a highwater mark and a hurdle rate

  • @klemmbo3601
    @klemmbo3601 ปีที่แล้ว +3

    Fabian! You are a top tier teacher. Keep going my friend

  • @jdjd605
    @jdjd605 ปีที่แล้ว +2

    Hi Fabian, could you make an updated video perhaps on what to do when you have a higher water-mark and a soft or hard hurdle rate in the same question? I'm able to do all your examples starting with the gain, end value and mngmt fees and then each incentive fee depending on how its asked but when you have both a watermark and hurdle im not sure how to write it out to get the answer

  • @newmercies1
    @newmercies1 2 ปีที่แล้ว +1

    By far the best video in youtube on this topic. Thank you so much!

  • @tedgrove9412
    @tedgrove9412 2 ปีที่แล้ว +1

    Thank you for covering this topic! Much appreciated!

  • @t_grumpynoodle
    @t_grumpynoodle 3 ปีที่แล้ว +1

    The timing for this video is perfect!.Thanks a lot

    • @FabianMoa
      @FabianMoa  3 ปีที่แล้ว +1

      You're welcome, Tanisha!

  • @kunal_nandurkar21
    @kunal_nandurkar21 ปีที่แล้ว +1

    Thank you for explaining this practically!

    • @FabianMoa
      @FabianMoa  ปีที่แล้ว

      You're very welcome!

  • @aaronkohlhoff
    @aaronkohlhoff ปีที่แล้ว +1

    Thanks alot for explaining the process.

  • @serigamel
    @serigamel 9 หลายเดือนก่อน +1

    Excellent explanation. Thank you

    • @FabianMoa
      @FabianMoa  9 หลายเดือนก่อน

      You're welcome!

  • @Элина-р1ч2э
    @Элина-р1ч2э 6 หลายเดือนก่อน

    Thank you for explanation, highly appreciate it 🙏

    • @FabianMoa
      @FabianMoa  6 หลายเดือนก่อน +1

      My pleasure

  • @lorrainemashirit921
    @lorrainemashirit921 3 ปีที่แล้ว +2

    Thank you for the explanation been struggling with this

    • @FabianMoa
      @FabianMoa  3 ปีที่แล้ว

      Glad it helped!

  • @faisaldandashli116
    @faisaldandashli116 6 หลายเดือนก่อน +1

    Very well explained, thank you!

    • @FabianMoa
      @FabianMoa  6 หลายเดือนก่อน

      You're very welcome!

  • @priyanshipareta8318
    @priyanshipareta8318 2 ปีที่แล้ว

    Thank you so much my all confusion regarding this is cleared now 🙇

  • @urmihossain
    @urmihossain 3 ปีที่แล้ว +2

    life saver. You are the best!

  • @zohrasheikh6618
    @zohrasheikh6618 3 ปีที่แล้ว +1

    Thank you so much for this, cleared all my confusion!

    • @FabianMoa
      @FabianMoa  3 ปีที่แล้ว

      No problem, Zohra!

  • @stutiagrawal1018
    @stutiagrawal1018 2 ปีที่แล้ว +2

    Hey, if you're a CFA L1 candidate still unsure of calculations. Do check this video out, helps a lot! Thank you.

  • @drawinganimator
    @drawinganimator ปีที่แล้ว

    about high water mark: when should I netting the end year AUM from high water mark, and when should I only compare it to the end year AUM.

  • @brianaranha8967
    @brianaranha8967 3 ปีที่แล้ว +1

    very well explained, thank you

    • @FabianMoa
      @FabianMoa  3 ปีที่แล้ว

      Glad it was helpful!

  • @asawirgull1914
    @asawirgull1914 7 หลายเดือนก่อน +1

    Thanks 🙏

  • @mammmmmoth
    @mammmmmoth ปีที่แล้ว

    Fantastic :)!!! Thank you

  • @andresgrtz
    @andresgrtz 6 หลายเดือนก่อน +1

    Thank you!!!

  • @rakeshb1725
    @rakeshb1725 3 ปีที่แล้ว +1

    Thanks for explanation

  • @ragho0ody2012
    @ragho0ody2012 2 ปีที่แล้ว

    The incentive fees in last scenario gave me a diff. no. which is 220,194,400

    • @FabianMoa
      @FabianMoa  2 ปีที่แล้ว

      Maybe breakdown the steps in how you arrive at that figure.

  • @game-boo2133
    @game-boo2133 2 ปีที่แล้ว

    Hi. I have question here. I often see during my month end Nav caculation, we book the reversal posting of incentive fee charged in previous month(we reverse the previous month incentive fee and book accrual of current month incentive fee)..can you please tell me the reason behind this..

  • @franciscojurado8627
    @franciscojurado8627 3 ปีที่แล้ว

    Hi Fabian -- thanks for these videos.
    i just wanted to ask something please. In one of the CFA exercises I noticed that the Soft Hurdle rate is compared versus the hedge fund's return (gross, i.e., without netting the management fee). Will this basically depend on the text of the exercise? I guess the reason why you've netted the return and compared it with such, is because the incentive fee is calculated net.
    Edit: Just another question, is the High Watermark always calculated after-fees? (despite that it's given in the last exercise)

    • @FabianMoa
      @FabianMoa  3 ปีที่แล้ว +1

      - If incentive fee is based on gross return (i.e. independent of management fee), then compare gross return to soft hurdle rate.
      - If incentive fee is based on return net of management fee, then compare (gross return minus management fee) to soft hurdle rate. Even if the gross return is greater than soft hurdle rate, no incentive fee will be paid if (gross return minus management fee) is less than the soft hurdle rate.
      - High watermark is the market value after fees

  • @kasturijoshi2826
    @kasturijoshi2826 2 ปีที่แล้ว

    Hello Fabian,
    In Scenario 5, why is Management fee not deducted while computing Effective return ??

    • @FabianMoa
      @FabianMoa  2 ปีที่แล้ว

      I did. I added the management fee and the incentive fee

  • @menonguy
    @menonguy ปีที่แล้ว

    amazing thanks

    • @FabianMoa
      @FabianMoa  ปีที่แล้ว

      You're welcome!

  • @commerceknowledgehub8922
    @commerceknowledgehub8922 3 ปีที่แล้ว

    It seem Soft hurdle rate calculation nit correct 🤦