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by justinmares 2236 days ago
This is almost exactly correct. Though what's crazy is they charge fees on the notional - aka the amount they're "insuring".

So if you have a 4b portfolio, they're charging fees on the 4b.

1 comments

Private equity does it. Why not these guys?

But seriously, not charging SOME sort of fee on capital that is likely to be uninvested on a short-term horizon is giving investors a pretty valuable free option. I'm assuming they have a flexible mandate and are able to invest more given some sort of market conditions. Gauging that capacity and properly modeling trade sizes is extremely important for a strategy like this and is not free.