I think I wrote this somewhere else, but … I don’t think the 50% is entirely unreasonable. The issue is that you have to expect a 2/20 charge or something like that, but if you’re dealing in illiquid assets that are being marked to market on a yearly basis with relatively low or no turnover, it might not be practical for the manager to charge a 2/20 fee. If all the gain is in valuation of the underlying properties, then there’s no way for the manager to extract the 20% performance gain without selling property to raise the cash.
20% of profits every year, versus 50% of the total charged once at the 6 year mark, might not end up being all that different, really. It just depends on the performance profile.
All the delays would bother me. But this is also a difficult year to attempt to do deals too.
Let’s face it, all these funds are a crap shoot. Bound to be. And frankly this is how it is in the hedge fund world. You’re giving money to someone based on the manager’s track record, not the fund’s track record, because the fund has to start somewhere. They’ll raise money for a while, then it takes a while to close, then you have to actually do the deals. There might even be clauses in the management regulations that prohibit them from acting before subscriptions are closed (I don’t know, you have to read the regs for the specific fund). If you want safe, you’re in that New Era fund which is just a fund of funds on top of ETFs, so at least you know what you’re getting into and that it can be gotten into, and really what you’re evaluating is the underlying ETF not the fund.