Short story about how screwed up asset mgmt industry can be. Many years ago we had a fund that was down ~20%, the PM was fired and a new PM with new strategies took over the fund.
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Allocator at a big pension fund with $100m invested literally begged us to start a new vehicle running the same strategies because they wanted to stay invested but couldn't justify to their boss being in a fund that was 20% underwater
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If we agreed it would have crystalized their losses and they would start again with a new high water mark. Obviously we didn't do it. Can't remember whether they redeemed or not, but the fund was back above high water mark within 15 months.
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Our perf fee was 20%. This allocator was willing to give up ~$4m (20% of 20% of $100m) of their investors' money rather than have a difficult conversation with their boss.
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