Hedge Fund Sales Fees and the Flow of Funds around the World

This paper presents evidence on hedge fund sales fees around the world. We show that sales fees have been extremely common, particularly among offshore funds. Also, we show the use of sales fees was more common in the 1990s and has dropped off in the 2000s and 2010s. We present evidence that shows sales fees impact fund sales. Sales fees flatten the flow-performance relationship among both non-fund-of-funds as well as fund-of-funds for offshore funds. Funds with sales fees have significantly more performance persistence. We present a wide array of robustness checks and discuss policy implications associated with the use and reporting of sales fees