London
HEDGE funds, shrinking at the fastest pace since the financial crisis, face a challenge to their lucrative fee model: "smart beta" money pools that charge a quarter of the levy and often don't demand a share of the profits.
The search for lower fees will help propel the assets managed by smart beta funds more than fourfold to US$1.2 trillion through 2019 from 2014, Citigroup Inc estimates.
The money pools, which operate like exchange-traded funds (ETFs), typically charge as little as half a per cent for managing money. That compares with the traditional 2 per cent of assets and 20 per cent of profits charged by hedge funds, a model criticised by Warren Buffett and pension funds.
"The hedge...
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