Tudor cuts hedge fund fees to keep clients

Bloomberg News

Tudor Investment Corp., the $11.6 billion hedge fund that charges among the highest fees in the industry, is trimming some of them for clients in its biggest fund amid losses this year.

The firm, founded and run by billionaire Paul Tudor Jones, a Memphis native whose career started trading cotton in New Orleans, will reduce fees for a share class that contains most of the main fund’s money to 2.25 percent of assets and 25 percent of profits, according to a letter sent to clients on Monday and obtained by Bloomberg. The fees were 2.75 percent and 27 percent. Tudor is also introducing a new pool for clients with $50 million investments or more that will charge 2 percent of assets and 25 percent of profits. The changes will take effect July 1.

Tudor is keeping fees for the main fund’s oldest share class unchanged at 4 percent of assets and 23 percent of profits. Hedge fund managers, among the highest paid in finance, traditionally charge clients 2 percent of assets and 20 percent of performance.

Tudor is being hit with client withdrawals as the hedge fund industry comes under attack for high fees and lackluster performance. Billionaire Warren Buffett last month described the fees as “a compensation scheme that is unbelievable” and said investors would be better off ditching expensive money managers. The $187 billion California State Teachers’ Retirement System said the model is “broken,” while the University of California’s $97.1 billion of endowment and pension assets said paying high fees for mediocre performance is “absurd.”

Tudor, started in 1980, is among the many macro hedge funds that have posted lackluster returns since the global financial crisis. Its clients had asked to pull about $1 billion in the first quarter.