Mark Mobius, Chairman of Franklin Templeton's Emerging Markets Group, is rumored to be opening a hedge fund in Asia. He manages the Templeton Asian Growth Fund which has returned 500% over the last ten years. It is the second best performing Asian fund in that timeframe. He has managed emerging markets funds since 1987.
After all this time, why would Mobius be moving from managing a mutual fund to a hedge fund? The freedom and fees. The fund will be able to short securities and use leverage to enhance returns. Hedge funds can charge a 2% management fee plus 20% of performance fee. Mutual funds charge a management fee and no performance fee. The "2 and 20" fees allows managers to participate in the upside of the fund and gives them a floor on the downside. We will examine this in a later posting.
The Reuters article can be found here.
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