Are hedge funds more expensive than mutual funds?

The conventional wisdom holds that hedge funds, with a typical 2 and 20 fee structure, are more expensive than mutual funds, with a roughly 120 basis point expense ratio. But that may not be the case, notes AllAboutAlpha.com. It really comes down to how you apportion the fees within a fund. If you were to separate an actively mutual managed fund into the alpha and beta components, at least one study has shown that the fees, on the alpha component anyway, are about the same as a typical hedge fund. AllAboutAlpha.com replicated the results, calculating the fee for the active management components of 30 large equity mutual funds. Fixing the management fee at 2 percent, the performance fee came in at about 20 percent. Interesting.

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- here's the article

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