# Fee structure `kaal:entity:fee-structure` **Status.** derived This node is assembled mechanically from the 22 claims that carry the concept tag `fee-structure`. It is a roster of what the corpus says under this term. It is **not** an adjudicated definition: no single statement here has been ruled canonical, and no first-appearance call has been made. Read the claims and judge for yourself. ## Every claim under this term 22 claims across 10 works, 2009 to 2021. **2009** - [1428387-007](https://wulfkaal.github.io/claims/1428387-007) [mechanism/argued] -- The hedge fund fee structure creates very strong financial incentives for managers to hide weak performance through valuation. > The fee structure of hedge funds creates very strong financial incentives to hide weak performance by way of valuation. Hedge Kaal, Hedge Fund Valuation Retailization, Regulation, and Investor Suitability (2009). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1428387 **2016** - [2715083-009](https://wulfkaal.github.io/claims/2715083-009) [empirical/evidenced] -- Unconstrained mutual funds differ from traditional fixed income mutual funds not only in trading strategy, using futures, short sales, and derivatives, but also in turnover and fee structure, which more closely resemble those of hedge funds. > the author found not only significant growth in these funds by launches, but also provided evidence pertaining to the extent to which unconstrained mutual funds differ in trading strategy from traditional mutual funds – unconstrained mutual funds use futures, short sales, and derivatives. Kaal, Confluence of Mutual and Private Funds (2016). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2715083 - [2739479-012](https://wulfkaal.github.io/claims/2739479-012) [mechanism/argued] -- The stronger performance of activist strategies lets activist private fund managers keep charging the higher 2 and 20 fee structure that other fund managers can no longer demand. > The higher performance of this investment strategy allows activist pri- vate fund managers to use the higher 2/20 fee structures, which other fund man- agers can no longer demand. Wulf A. Kaal, The Post Dodd-Frank Act Evolution of the Private Fund Industry Comparative Evidence from 2012 and 2 (2016). SSRN: https://ssrn.com/abstract=2739479 - [2811718-025](https://wulfkaal.github.io/claims/2811718-025) [mechanism/argued] -- Fund managers were incentivized to route capital to Madoff because he charged notoriously low fees for the hedge fund business, taking only transaction fees rather than fees based on assets under management. > Fund managers were incentivized to invest in this manner because Madoff charged notoriously low fees for the hedge fund business (charging only transaction fees rather than fees based on AUM) Wulf A. Kaal, Private Fund Investor Due Diligence – Evidence from 1995 to 2015 (2016). SSRN: https://ssrn.com/abstract=2811718 **2017** - [2959730-001](https://wulfkaal.github.io/claims/2959730-001) [mechanism/argued] -- Private fund advisers' increasing use of blockchain technology, artificial intelligence, and big data is a distinct source of downward pressure on the traditional 2/20 fee structure that commentators have not examined. > A factor contributing to the market pressure on the fee structure that has not been examined by commentators pertains to the increasing use of use of blockchain technology, artificial intelligence, and big data by private fund advisers. Wulf A. Kaal, Blockchain Applications and Fee Structure Developments in Private Investment Funds (2017). SSRN: https://ssrn.com/abstract=2959730 - [2959730-004](https://wulfkaal.github.io/claims/2959730-004) [predictive/argued] -- As the use of blockchain technology grows in the private investment fund industry, pressure on the traditional fee structure is likely to continue to grow, even though the proportion of fund strategies applying such technologies remains small. > While the overall proportion of strategies of private investment funds that apply modern technologies, including blockchain technology, is still small, as the use of blockchain technology grows in the private investment fund industry, the pressure on the fee structure is likely to continue to grow. Wulf A. Kaal, Blockchain Applications and Fee Structure Developments in Private Investment Funds (2017). SSRN: https://ssrn.com/abstract=2959730 - [2959730-005](https://wulfkaal.github.io/claims/2959730-005) [empirical/evidenced] -- The historical private fund management fee of 2% has shifted in recent years to roughly 1.0% for new managers and 1.5 to 1.8% for established managers with an adequate track record. > However, the historical fee of 2% of commitments through the reinvestment period, then 2% on the cost basis for the investments/value of fund has shifted in recent years closer to 1.0% for new managers and 1.5-1.8% for established managers with an adequate track record. Wulf A. Kaal, Blockchain Applications and Fee Structure Developments in Private Investment Funds (2017). SSRN: https://ssrn.com/abstract=2959730 - [2959730-010](https://wulfkaal.github.io/claims/2959730-010) [mechanism/argued] -- Market oversaturation increases pressure on private investment fund managers' performance and produces compromise fee arrangements such as charging fees on invested capital only. > According to some observers the market is oversaturated which increases pressure on private investment fund managers' performance26 and results in compromise fee arrangements, such as paying fees on invested capital only. Wulf A. Kaal, Blockchain Applications and Fee Structure Developments in Private Investment Funds (2017). SSRN: https://ssrn.com/abstract=2959730 - [2959730-029](https://wulfkaal.github.io/claims/2959730-029) [mechanism/argued] -- Blockchain technology enables managers to charge per transaction fees, which undermines the existing 2/20 fee model, because it facilitates seamless and efficient calculation of management fees per transaction. > Blockchain technology enables managers to charge per- transaction fees which undermines the existing 2/20 fee model. Blockchain technology facilitates a seamless and efficient calculation of management fees per transaction. Wulf A. Kaal, Blockchain Applications and Fee Structure Developments in Private Investment Funds (2017). SSRN: https://ssrn.com/abstract=2959730 - [2959730-041](https://wulfkaal.github.io/claims/2959730-041) [empirical/evidenced] -- Survey responses from blockchain using private investment fund advisers show that their fee structure deviates from the traditional 2/20 model, with responding managers reporting alternative fee structures that benefited their clients. > The graph illustrates that the fee structure of those private investment fund advisers that use blockchain technology (and responded to the survey) deviates from the traditional 2/20 model. Wulf A. Kaal, Blockchain Applications and Fee Structure Developments in Private Investment Funds (2017). SSRN: https://ssrn.com/abstract=2959730 - [2959730-042](https://wulfkaal.github.io/claims/2959730-042) [mechanism/argued] -- The rise of blockchain applications in private investment funds can exacerbate the industry's already changing fee structure. > The paper has illustrated that the rise of blockchain applications in private investment funds can exacerbate the already changing fee structure of the industry. Wulf A. Kaal, Blockchain Applications and Fee Structure Developments in Private Investment Funds (2017). SSRN: https://ssrn.com/abstract=2959730 - [2998033-027](https://wulfkaal.github.io/claims/2998033-027) [empirical/evidenced] -- Private fund management fees have compressed materially: the historical two percent of commitments has shifted in recent years to roughly 1.0 percent for new managers and 1.5 to 1.8 percent for established managers with an adequate track record. > However, the historical fee of 2% of commitments through the reinvestment period, then 2% on the cost basis for the investments/value of fund has shifted in recent years closer to 1.0% for new managers and 1.5-1.8% for established managers with an adequate track record. Wulf A. Kaal, Blockchain Innovation for Private Investment Funds (2017). SSRN: https://ssrn.com/abstract=2998033 - [2998033-030](https://wulfkaal.github.io/claims/2998033-030) [empirical/asserted] -- Anecdotal evidence suggests that the majority of private fund advisers who use blockchain, artificial intelligence, and big data in their operations or strategy charge substantially lower fees than advisers who do not use these technologies. > Anecdotal evidence suggests that the majority of private fund advisers that use blockchain technology, artificial intelligence, and big data in different aspects of their operations or strategy have a substantially lower fee structure than those who do not use them. Wulf A. Kaal, Blockchain Innovation for Private Investment Funds (2017). SSRN: https://ssrn.com/abstract=2998033 - [2998033-031](https://wulfkaal.github.io/claims/2998033-031) [mechanism/evidenced] -- LendingRobot can charge only a one percent management fee and a maximum 0.59 percent fund expense fee because its business model removes the investment adviser, overhead costs, and the legal fees attached to each individual investor agreement. > Because LendingRobots' business model removes the investment adviser, overhead costs, and legal fees associated with each investor agreement, LendingRobot is able to charge a mere 1% management fee and a maximum 0.59% fund expense fee per year. Wulf A. Kaal, Blockchain Innovation for Private Investment Funds (2017). SSRN: https://ssrn.com/abstract=2998033 - [2998033-032](https://wulfkaal.github.io/claims/2998033-032) [mechanism/argued] -- Blockchain enables managers to charge per transaction fees, and that capability undermines the existing two and twenty fee model. > Blockchain technology enables managers to charge per- transaction fees which undermines the existing 2/20 fee model. Wulf A. Kaal, Blockchain Innovation for Private Investment Funds (2017). SSRN: https://ssrn.com/abstract=2998033 **2018** - [3125827-012](https://wulfkaal.github.io/claims/3125827-012) [failure/argued] *(failure mode)* -- No consensus protocol can guard against Byzantine faults when a single transaction is worth more than the promise of all future fees for the entire platform, because in that case a party can profitably bribe the whole node set to destroy the chain's own integrity. > No protocol can guard against Byzantine faults if a transaction is more valuable than the promise of all future fees for the entire platform; in this case a party could bribe the entire set of nodes (or 51%) Craig Calcaterra, Wulf A. Kaal, Secure Proof of Stake Protocol (2018). SSRN: https://ssrn.com/abstract=3125827 - [3125827-013](https://wulfkaal.github.io/claims/3125827-013) [condition/argued] -- Altruism cannot be relied on in a decentralized anonymous system, so fees are ultimately crucial; the authors conclude that several blockchains with different fee structures must exist so that different transaction values can be given correspondingly different security. > Fees are crucial at some point, since we cannot rely on altruism in a decentralized, anonymous system in our selfish world. Therefore it seems necessary for there to exist several blockchains with different fee structures to guarantee different security for different Craig Calcaterra, Wulf A. Kaal, Secure Proof of Stake Protocol (2018). SSRN: https://ssrn.com/abstract=3125827 **2019** - [3405660-032](https://wulfkaal.github.io/claims/3405660-032) [mechanism/argued] -- By letting funds implement their own risk monitoring systems, indirect regulation avoids compliance costs that would otherwise threaten the profitability needed to justify the 2 and 20 fee structure to clients. > Indirect regulation enables the hedge fund industry to avoid costs by implementing their own risk monitoring systems and measurements. Accordingly, indirect regulation helps address the danger that hedge funds might not be sufficiently profitable to justify their 2/20 fee structure to clients. Kaal, Indirect Regulation of Hedge Funds (2019). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3405660 - [3409548-001](https://wulfkaal.github.io/claims/3409548-001) [mechanism/argued] -- Hedge fund managers adopt emerging technology because it converts into a fee premium: technology driven outperformance makes them more competitive than other funds and financial institutions, which in turn lets them charge higher fees. > Being more competitive through technology and creating higher returns for their clients, in turn, allows them to charge higher fees than traditional financial institutions. Kaal, Financial Technology and Hedge Funds (2019). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3409548 - [3409548-002](https://wulfkaal.github.io/claims/3409548-002) [condition/argued] -- The traditional 2 and 20 fee model has become increasingly difficult to justify, and embracing modern financial products is what allows managers to produce returns that still support that model. > In recent years, it became increasingly more difficult to justify the 2 and 20 fee model.4 Embracing modern financial products allows them to produce returns that can still justify that fee model. Kaal, Financial Technology and Hedge Funds (2019). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3409548 **2021** - [3962614-032](https://wulfkaal.github.io/claims/3962614-032) [design/asserted] -- In the hybrid VC DAO model eighty percent of returns are allocated to investors pro rata as ROI and twenty percent of returns are allocated to the reputation salary pool. > 80% of returns are allocated to investors pro rata as ROI. 20% of returns are allocated to the reputation salary pool. Wulf A. Kaal, REPUTATION AS CAPITAL – How Decentralized Autonomous Organizations Address Shortcomings in the Ventu (2021). SSRN: https://ssrn.com/abstract=3962614 - [3962614-039](https://wulfkaal.github.io/claims/3962614-039) [design/argued] -- Because the public co purchases alongside DAO investment club members and expects to pay for the right to benefit from the collective wisdom of those members and the deal pipeline they generate, the public should expect to pay the usual two and twenty fees. > Because the public co-purchases with the DAOIC members and expects to pay a price for the right to benefit from the collective wisdom of the DAOIC members and the deal pipeline they can together generate, the public should expect to pay the usual 2/20 fees. Wulf A. Kaal, REPUTATION AS CAPITAL – How Decentralized Autonomous Organizations Address Shortcomings in the Ventu (2021). SSRN: https://ssrn.com/abstract=3962614 ## Verify Every claim above resolves to a record carrying a verbatim source quote, the sha256 of the source PDF, and a preformatted citation. 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