Hedge fund profits expected to fall

The hedge industry has gotten bigger, but profits are expected to decline on increased competition and the push by institutions for lower fees. Citibank conducted their annual survey of hedge funds and found that average fees were down and expenses were up over the last year. The net has been a tough year for hedge funds especially smaller managers. Large hedge funds were able to increase management fees and control costs. The survey clearly shows the economy of scale in the industry. If incentive fees are not hit for small firm, the economics are not attractive.