Basic HTML Version
17
|
2013 Business Expense Benchmark Survey
More money was spent on business management by
small hedge funds with $100 million AUM than on any
other category of expense. This remains the highest
area of spend for firms with $500 million AUM as
well. Managers in this AUM band upped their average
business management spend by $313,513—23% of
the total increase. However, business management
remains steady, in terms of the share of expense it
represents for these firms. Business management
represented 27% of dollars spent by $100 million AUM
firms and 25% of dollars spent by larger organizations
that manage $500 million.
In contrast, the sharp spike in dollars spent on
marketing by firms with $500 million AUM shows a
shift in emphasis. Hedge funds with $100 million AUM
only spent 18% on marketing across their total spend
for investment support and business management.
That figure rises to 24% for firms with $500 million
AUM. Indeed, higher spending on marketing is the
single largest jump noted, at $453,306, which
accounted for 32% of the total $1.45 million increase.
This was the largest percentage increase in spend
between $100 million and $500 million AUM firms as
well, registering a 143% jump.
The other area that showed a substantial increase on
a percentage basis was risk. Spending on risk jumped
131% for firms with $500 million AUM versus their
level of spend at $100 million AUM. On a dollar basis,
spending on risk is substantially lower than in many
other areas, but this category takes on increased
importance as a firm begins to grow, rising from 8%
of total spend across investment support and business
management for $100 million AUM firms to 10% for
$500 million AUM firms.
Crossing the Institutional Threshold: Moving
from $500 Million to $1.5 Billion AUM
There is a substantial rise in spending noted as firms
move above $1.0 billion AUM, a level typically seen
as the institutional threshold due to the large tickets
these investors write and their desire to be no more
than 10% of any manager’s total assets. As shown
in Chart 9, firms with $1.5 billion AUM increase their
Source: Citi Prime Finance. Management company expenses exclude expenses charged back at the fund level and excludes compensation
and third party expenses for investment management. Total dataset examined (44 firms, $125 billion AUM)
Chart 9: Crossing the Institutional Threshold: Management Company Expenses
(Investment Support & Business Management)
+$543,237
+1.0M
+$240,548
+$394,503
+$946,343
+$896,180
+ $4.03M
$
$400K
$600K
$800K
$1M
$1.2M
$1.4M
$1.6M
$1.8M
$2M
Marketing
Operations
Risk
Compliance Business Mgmt Technology
$500M
$1.5B
$200K
EXPENSES