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Hedge fund's fee model faces smart beta threat

These competitive money pools typically charge as little as a quarter of the levy and often don't demand a share of the profits.

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IMPACT OF SLASHED FEES: Goldman Sachs's ActiveBeta Emerging Markets Equity ETF now manages US$640 million compared with about US$20 million in September. Its US large cap equity ETF now manages more than US$500 million.

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...

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