Swaggering hedge fund managers, long known for ignoring client complaints during years of strong performance, are trying something new: listening.
The shift was evident at the annual SkyBridge Alternatives Conference in Las Vegas this week, where a group of money managers humbled by losses or meager returns acknowledged that they needed to do more to satisfy investors.
"Expectations about a hedge fund manager's way of conducting business has become more demanding - and perhaps rightfully so," Kenneth Tropin, founder of $12.1 billion Graham Capital Management, said during a panel discussion Wednesday at the Bellagio hotel and casino.
"Every hedge fund manager has had to make the effort to be much more transparent, a much better communicator and more negotiable."
After a string of disappointing investment returns, those negotiations have recently centered on lowering the relatively high fees hedge funds charge.
Managers traditionally take 2 percent of assets managed annually and 20 percent of profits, but investors now pay an average of 1.5 percent and 17.7 percent, respectively, according to data tracker HFR.
"In a low return environment, unless you are particularly exceptional you're not going to be able to generate returns sufficient to justify the fees," Leon Cooperman, billionaire founder of $5.2 billion hedge fund firm Omega Advisors, said while speaking at the same event.
"Fees have got to come down," added Kyle Bass, Chief Investment Officer of Hayman Capital Management.
Investors in hedge funds are pleased that managers are more willing to listen.
Sean Bill, Investment Program Manager for the Santa Clara Valley Transportation Authority and an advisor to the San Francisco Employees Retirement System, said firms are now more willing to lower their fees and increase the amount of portfolio information they share.