When people talk about Cost Pass-Through, it usually boils down to three lines，The manager passes operating costs to investors,The fees are high,Investors aren’t happy.
But how exactly does it work? What gets passed through? Why do different funds do it differently? Few bother to look closer.
Today’s piece tears open the Cost Pass-Through mechanisms of multi-strategy hedge funds.
- Millennium charges no management fee but passes through every single cost.
- Citadel charges 1.5% and stacks pass-through fees on top.
- Point72, once bankrolled by Cohen himself, now makes investors foot the bill.
- ExodusPoint waives fees when performance lags—because it has the weakest bargaining power.
Four top-tier platforms, four completely different pricing logics. The answer behind all of them comes down to one thing: bargaining power.
But that’s just the surface. This piece not only lays out the staggering expense list—from compensation, rent, and computers, to private jets, first-class travel, snacks, employee parties, Bloomberg terminals, data centers, and AI, with a catch-all category for “special or non-recurring expenses” that covers just about anything except artwork—it also dissects the “gross performance” mechanism behind PM compensation, and reveals the real drivers pushing PMs toward more leverage, higher frequency, and greater volatility.
For the full report, reply: Cost
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