The top hedge fund managers took home dizzying sums last year, fed by a bull market in commodities and investors’ willingness to pay up for proven track records.Institutional Investor’s Alpha reported Wednesday the top 50 hedge fund managers earned a combined $29 billion in 2007. Five managers earned more than $1 billion.
One contributor to the enormous amounts of money hedge fund managers are making is the unraveling of the traditional “2 and 20” method of compensation. For years, funds typically charged 2 percent of the amount invested plus 20 percent of the profits.
Ezra Zask of Lakeville Capital Management, a hedge fund advisory, said some of the bigger hedge funds are now charging as much as 5 percent of the invested principal and 40 percent of the profits.
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