Management fees for hedge funds traditionally sat at 2% and have drifted lower, with emerging managers often charging 1% to 1.5% and offering reduced fees to early investors through founders share classes. The fee is calculated by the administrator from the NAV and paid to the manager periodically, usually monthly or quarterly in arrears.
Investors compare management fees against the fund's expense ratio as a whole, since fund-level costs such as administration, audit and custody are charged to the fund on top.