The Hedge Fund Managers Who Work for Tips(blog.instavest.com)
blog.instavest.com
The Hedge Fund Managers Who Work for Tips
http://blog.instavest.com/the-hedge-fund-managers-who-work-for-tips
9 comments
> The reason hedge funds are falling out of favor is more to do with a surfeit of crappy funds ...
> That statistic conceals the limited number of cleverly managed, fast moving funds which were able to take contrary positions in the credit bubble and protect their investor's money by shorting CDSs.
Suppose as a matter of self reflection, I determine that I don't have whatever intrinsic ability + learned skill + ??? is needed to pick securities such that will consistently outperform passive investing strategies. Does that necessarily imply that I don't have the ability to pick an active fund from among the available funds that will outperform (given a certain goal)? Or is it a different skill set?
Note I'm not asking you to tell me how to go about doing that, I can get ten answers from ten different people. What am asking is there conceptually a talent/skill that would allow me to do that, and should I have any reason to think I've got it?
Suppose as a matter of self reflection, I determine that I don't have whatever intrinsic ability + learned skill + ??? is needed to pick securities such that will consistently outperform passive investing strategies. Does that necessarily imply that I don't have the ability to pick an active fund from among the available funds that will outperform (given a certain goal)? Or is it a different skill set?
Note I'm not asking you to tell me how to go about doing that, I can get ten answers from ten different people. What am asking is there conceptually a talent/skill that would allow me to do that, and should I have any reason to think I've got it?
What am asking is there conceptually a talent/skill that would allow me to do that, and should I have any reason to think I've got it?
Excellent question. The answer, well my answer, is that it's a different skill set. I think the value the manager brings is their skill and diligence in handling the implementation details (which commodities to buy, securities to short, options to write; how to manage risk) of a strategy, which could be as simple as some directional conviction (I like renewables, say) or a philosophy (opportunistic investing in special situations in mid caps).
Your skill is that of an educated consumer: deciding what product you want (your conviction), and selecting a provider based on whatever subjective and objective metrics you deem important. Not all that dissimilar from choosing any expert vendor in an area you don't understand in depth - doctors, contractors, lawyers, even financial advisors (to whom you could outsource the selection part entirely, of course)
Note that nowhere here am I denying the existence of luck in getting into those funds which were able to do well in the crisis.
Excellent question. The answer, well my answer, is that it's a different skill set. I think the value the manager brings is their skill and diligence in handling the implementation details (which commodities to buy, securities to short, options to write; how to manage risk) of a strategy, which could be as simple as some directional conviction (I like renewables, say) or a philosophy (opportunistic investing in special situations in mid caps).
Your skill is that of an educated consumer: deciding what product you want (your conviction), and selecting a provider based on whatever subjective and objective metrics you deem important. Not all that dissimilar from choosing any expert vendor in an area you don't understand in depth - doctors, contractors, lawyers, even financial advisors (to whom you could outsource the selection part entirely, of course)
Note that nowhere here am I denying the existence of luck in getting into those funds which were able to do well in the crisis.
Re: hiring expert vendors
In my experience most people are terrible at that. Even if you go online and look at what other people have to say, those people have no idea about how well the professional did, given that they didn't know expected distribution of outcomes should have been to begin with. Clients often end up being unreasonably thrilled with a mildly positive result in an easy case and unreasonably pissed off with a mildly positive result in a really tough case.
The whole thing ends up devolving into a personality, and sometimes literal, beauty contest.
In my experience most people are terrible at that. Even if you go online and look at what other people have to say, those people have no idea about how well the professional did, given that they didn't know expected distribution of outcomes should have been to begin with. Clients often end up being unreasonably thrilled with a mildly positive result in an easy case and unreasonably pissed off with a mildly positive result in a really tough case.
The whole thing ends up devolving into a personality, and sometimes literal, beauty contest.
True. I'm actually amazed that many business owners are able to select and get good outcomes from expert vendors, when they have a very limited understanding of how those vendors achieve their results.
Perhaps this is the reason for the prevalent advice that consultants should sell the benefits/outcomes, get referrals, rather than focus on the technical tasks they will undertake to achieve the outcomes. The business owner to whom they are selling has no means to evaluate claims of their technical chops. But, if they see the consultant has succeeded in something similar for 10 previous clients, then that may be enough for them to make a decision to start.
Perhaps this is the reason for the prevalent advice that consultants should sell the benefits/outcomes, get referrals, rather than focus on the technical tasks they will undertake to achieve the outcomes. The business owner to whom they are selling has no means to evaluate claims of their technical chops. But, if they see the consultant has succeeded in something similar for 10 previous clients, then that may be enough for them to make a decision to start.
That's true, though I'd have to hope those people in the market for alternative investments would, if only by virtue of more frequent exposure to professional advisors, have a more sophisticated approach.
Perhaps that's where funds of funds come in. FoF managers can spend all day evaluating various hedge funds' performance/execution/whatever. But how do you pick a FoF manager?
Heh heh heh this is exactly the right question. A fund is just another tradable instrument. I don't see much difference between evaluating the fund's management and historical performance vs. evaluating those of a public corporation -- except that in the latter case, you can probably get more information.
I saw an analysis somewhere that claimed that for mutual funds, annual performance is negatively autocorrelated: the funds that are likeliest to do well next year are the ones that did the worst last year. I wouldn't be surprised if this held true for hedge funds as well.
I saw an analysis somewhere that claimed that for mutual funds, annual performance is negatively autocorrelated: the funds that are likeliest to do well next year are the ones that did the worst last year. I wouldn't be surprised if this held true for hedge funds as well.
Except that, in terms of investment exposure, your effort is leveraged significantly when you evaluate a fund's management vs. a single public company.
Thanks for your thoughtful comment. Agreed that there are some bad apples in the HF space and I think that many of them will die in the next few years. Unfortunately, many emerging managers can't start their own hedge fund because it takes a minimum of $250 million just to get the ball rolling. At Instavest, we hope to be a launching platform for these folks while delivering value to other investors.
I kind of thought that would be your play - I just replied to another comment below; I wonder how close to the mark I am.
I'll be watching closely.
I'll be watching closely.
I've always struggled to understand why hedge funds exist. As the author points out, the average hedge fund severely underperforms the market while charging a large fee to do so. I was talking with a guy who works at a hedge fund over the weekend and he half-jokingly told me that his hedge fund survived on institutional investments and that most of their clients didn't really care as long as his fund "didn't lose too much money".
If you take any finance class anywhere in the world, you are bound to come across the random-walk theory of the stock market, as well as strong, semi-strong, and weak market efficiency theory. The only way to reconcile these theories with the hunt for alpha is through differences in information - aka insider trading. The funds that consistently outperform the market are either 1 in a million lucky (how do you choose this firm as an investor? you don't), or they trade on information that others do not have access to.
Insider information is the only logical reason to invest in a hedge fund in my opinion. If you know the managers of fund X are buddies with Janet Yellen, go golfing with fortune 500 CEOs on the weekends, and vacation in Europe with French politicians. Just hope that they aren't the 1/100 that the government decides to make an example out of.
Otherwise, as most of my professors have advised, you should just invest in a portfolio of ETFs and only pick stocks for fun with money you aren't afraid to lose.
On instavest: So why would I invest with a novice hedge fund manager who has none of these connections, who is competing with the thousands of hyper-intelligent grad students our system churns out into finance every year (rather than underfunded labs and dwindling academic positions), who is just trying to get his name out there placing risky bets in a bubble of a market?
If you take any finance class anywhere in the world, you are bound to come across the random-walk theory of the stock market, as well as strong, semi-strong, and weak market efficiency theory. The only way to reconcile these theories with the hunt for alpha is through differences in information - aka insider trading. The funds that consistently outperform the market are either 1 in a million lucky (how do you choose this firm as an investor? you don't), or they trade on information that others do not have access to.
Insider information is the only logical reason to invest in a hedge fund in my opinion. If you know the managers of fund X are buddies with Janet Yellen, go golfing with fortune 500 CEOs on the weekends, and vacation in Europe with French politicians. Just hope that they aren't the 1/100 that the government decides to make an example out of.
Otherwise, as most of my professors have advised, you should just invest in a portfolio of ETFs and only pick stocks for fun with money you aren't afraid to lose.
On instavest: So why would I invest with a novice hedge fund manager who has none of these connections, who is competing with the thousands of hyper-intelligent grad students our system churns out into finance every year (rather than underfunded labs and dwindling academic positions), who is just trying to get his name out there placing risky bets in a bubble of a market?
I think you raise a few good issues but I'd like to poke, lightly, at the idea that the only information advantage available to hedge funds is "insider" information. Certainly some successful firms built their track record with illegal insider trading that but that's not the whole story.
They have better access to research, they have better access to the analysts whose opinions help drive public understanding of the company, they have better access to management to ask clarifying questions on areas of concern. They spend every day steeped in the facts, perceptions, and research that are relevant to investing. In short, they have a massive information advantage over a casual investor or day-trader. This does not, necessarily, mean they're trading on "insider information."
Finally, just to clarify, insider trading is often misunderstood. A violation depends on meeting all of the following criteria:
1) The information is material. 2) The information is non-public. 3) There was a breach of duty in sharing or trading on the information.
As an oversimplification: if Joe overhears a conversation between the CFO of a Fortune500 company and his boss talking about losing a major contract... only the first two criteria are satisfied and Joe can buy/trade without fear of prosecution.
They have better access to research, they have better access to the analysts whose opinions help drive public understanding of the company, they have better access to management to ask clarifying questions on areas of concern. They spend every day steeped in the facts, perceptions, and research that are relevant to investing. In short, they have a massive information advantage over a casual investor or day-trader. This does not, necessarily, mean they're trading on "insider information."
Finally, just to clarify, insider trading is often misunderstood. A violation depends on meeting all of the following criteria:
1) The information is material. 2) The information is non-public. 3) There was a breach of duty in sharing or trading on the information.
As an oversimplification: if Joe overhears a conversation between the CFO of a Fortune500 company and his boss talking about losing a major contract... only the first two criteria are satisfied and Joe can buy/trade without fear of prosecution.
Agreed that they have a massive information advantage over the casual investor, as this is their job. My argument is not hedge fund vs. casual investor, it's hedge fund vs. hedge fund.
They are all equally-intelligent individuals with the same ivy-league degrees and expensive equipment. The only differentiating factor in this saturated market is network strength.
Not arguing the legality of trading on insider information either. The laws are notoriously unclear, hard to enforce, and subsequently broken because information is harder to track than money, cars, and drugs. At the end of the day I would appeal to an ethical duty not to impoverish your fellow man and rend the fabric of the society that brought you up, rather than the flimsy and unenforceable definitions set forth in the legal code.
On the last note, to lighten the tone: any budding hedge fund managers should consider taking time off to sunbathe more :)
http://www.dallasnews.com/business/headlines/20131013-cuban-...
They are all equally-intelligent individuals with the same ivy-league degrees and expensive equipment. The only differentiating factor in this saturated market is network strength.
Not arguing the legality of trading on insider information either. The laws are notoriously unclear, hard to enforce, and subsequently broken because information is harder to track than money, cars, and drugs. At the end of the day I would appeal to an ethical duty not to impoverish your fellow man and rend the fabric of the society that brought you up, rather than the flimsy and unenforceable definitions set forth in the legal code.
On the last note, to lighten the tone: any budding hedge fund managers should consider taking time off to sunbathe more :)
http://www.dallasnews.com/business/headlines/20131013-cuban-...
Thanks, Roy. I believe that the Index Fund approach is a good one - especially for novice investors - and Instavest definitely does not replace Index Funds.
What we are, however, is a better to invest in the stock market. The problem with investing in the stock market is (i) where do I invest? and (ii) when / how do I get out? The Instavest platform is a curated research base that's meant to show you the ideas that our out there. There is no obligation to invest (or follow, as you put it). You can poke around and if something strikes your fancy, jump in.
To come back to Index Funds for a second, I think that ~85% should be in Index funds unless you have an edge. The balance of your portfolio should be in higher returning assets. Its hard to do that buy yourself, however, and that's how Instavest adds value.
On the topic market efficiency, I think Warren Buffett said it best" "If I was running $1 million today, or $10 million for that matter, I’d be fully invested. Anyone who says that size does not hurt investment performance is selling. The highest rates of return I’ve ever achieved were in the 1950s. I killed the Dow. You ought to see the numbers. But I was investing peanuts then. It’s a huge structural advantage not to have a lot of money. I think I could make you 50% a year on $1 million. No, I know I could. I guarantee that.”
The reason why retail investors have a structural advantage is because they can invest small dollars in relatively inefficient parts of the capital structure. A large hedge fund or Goldman Sachs can't invest in a small cap company because that doesn't have high average daily trading volume because they have to put big dollars to work. This leaves a part of the market that is relatively uncovered with an opportunity to make substantial returns.
Folks on Instavest are not investing in Google or Apple, they are looking for overlooked stocks or opportunities to make incremental return like this (scroll to bottom of this link): http://blog.instavest.com/the-17-investment
Hope that clarifies things :)
What we are, however, is a better to invest in the stock market. The problem with investing in the stock market is (i) where do I invest? and (ii) when / how do I get out? The Instavest platform is a curated research base that's meant to show you the ideas that our out there. There is no obligation to invest (or follow, as you put it). You can poke around and if something strikes your fancy, jump in.
To come back to Index Funds for a second, I think that ~85% should be in Index funds unless you have an edge. The balance of your portfolio should be in higher returning assets. Its hard to do that buy yourself, however, and that's how Instavest adds value.
On the topic market efficiency, I think Warren Buffett said it best" "If I was running $1 million today, or $10 million for that matter, I’d be fully invested. Anyone who says that size does not hurt investment performance is selling. The highest rates of return I’ve ever achieved were in the 1950s. I killed the Dow. You ought to see the numbers. But I was investing peanuts then. It’s a huge structural advantage not to have a lot of money. I think I could make you 50% a year on $1 million. No, I know I could. I guarantee that.”
The reason why retail investors have a structural advantage is because they can invest small dollars in relatively inefficient parts of the capital structure. A large hedge fund or Goldman Sachs can't invest in a small cap company because that doesn't have high average daily trading volume because they have to put big dollars to work. This leaves a part of the market that is relatively uncovered with an opportunity to make substantial returns.
Folks on Instavest are not investing in Google or Apple, they are looking for overlooked stocks or opportunities to make incremental return like this (scroll to bottom of this link): http://blog.instavest.com/the-17-investment
Hope that clarifies things :)
That's a really good way of putting it by Warren Buffet. This phenomenon of the bottom being ignored happens in software too of course:
http://www.saastr.com/the-simple-reason-why-there-will-be-10...
"Salesforce is now working on as many $100m+ deals as it can try to close. Because once you adding > $1 billion in ARR a year, you need a few Really, Really Big Enterprise deals to move the needle. And a handful of $50m-$100m deals are, by definition, the new target to really move the needle at that scale.
Given that … does it make any sense to pursue the $9 a month market? Or the $2000 ACV market? I mean, not really. And Salesforce isn’t.
So the bottom 10% of this $10 billion market, or $1 billion, isn’t even being addressed by Salesforce."
"Salesforce is now working on as many $100m+ deals as it can try to close. Because once you adding > $1 billion in ARR a year, you need a few Really, Really Big Enterprise deals to move the needle. And a handful of $50m-$100m deals are, by definition, the new target to really move the needle at that scale.
Given that … does it make any sense to pursue the $9 a month market? Or the $2000 ACV market? I mean, not really. And Salesforce isn’t.
So the bottom 10% of this $10 billion market, or $1 billion, isn’t even being addressed by Salesforce."
Whereas I like the idea, large hedge funds will still exist and thrive on their fee structure.
These rely on a considerable sum of institutional investors, where tipping wouldn't be feasible.
These rely on a considerable sum of institutional investors, where tipping wouldn't be feasible.
Thanks!
That's a fair point - although I think a lot of institutional investors (LPs) are pushing back on management fees both in the hedge fund and private equity arenas.
I think a fundamental alignment of incentives - putting your money where your mouth is - can be very powerful. This demands a flight to quality where only the best managers survive and investors know what they are "paying for."
That's a fair point - although I think a lot of institutional investors (LPs) are pushing back on management fees both in the hedge fund and private equity arenas.
I think a fundamental alignment of incentives - putting your money where your mouth is - can be very powerful. This demands a flight to quality where only the best managers survive and investors know what they are "paying for."
I love the idea here, but I really wonder what incentive people have to tip (especially if it appears others are tipping). It's great that you've measured a ~10% tip rate, I hope it stays up there.
But it seems like really fertile ground for a free rider problem. Do you have plans for that if it manifests itself?
But it seems like really fertile ground for a free rider problem. Do you have plans for that if it manifests itself?
I made an account to play around with, I don't have too much money to play with at the moment so I wanted to start with a $50 investment. No dice, this requires a >$1000 initial investment. Maybe when my student loans are paid off I'll come back to this.
Thanks for letting us know of this. This is a constraint set by working with a brokerage partner. I think it's a good constraint though because trading with small amounts makes transaction fees to big relative to your capital base ($3.49/trade is losing nearly 10% of your capital at $50).
You may also cancel at any time with 0 fees. So if you deposited $1000 and want to leave, you may do so with all $1000.
Finally, there is a product preview here: https://instavest.com/preview-feed/
In the future, if we're able to get lower transaction fees, we will definitely lower the minimum (assuming we have the power to do so)!
You may also cancel at any time with 0 fees. So if you deposited $1000 and want to leave, you may do so with all $1000.
Finally, there is a product preview here: https://instavest.com/preview-feed/
In the future, if we're able to get lower transaction fees, we will definitely lower the minimum (assuming we have the power to do so)!
Instavest could use a few visualizations for the hedge fund investors like this:
http://54.149.66.250/sp500/sp500_visualizations.html
http://54.149.66.250/sp500/sp500_visualizations.html
Thanks for the tip!
Interesting concept.
Here is why I think it might have problems. Most Hedge funds fall into a few categories, almost all of which won't help the average person invest....
1) guys who have a great understanding of one very niche area. These types of funds tend to work for a couple of years until the niche goes away, ie you might understand how prefered's work better than anyone else but sooner or later the rest of the market will catch up and your alpha goes away.
The average person can't take advantage of this as they won't have the contacts, expertise, legal ability, etc to work in these niches
2) market micro structure, these are your HFT and algorithmic guys, you just can't do this on your own so knowing what they do doesn't help you at all.
3) the warren buffets, knowing buffet's portfolio doesn't do you any good as buffet gets invited to do deals by the companies themselves at discounts to their current values, ie a company that needs cash will offer Buffet a preferred at a discount that pays a generous return.
Again this just doesn't help the average person.
4) Funds that just shouldn't have been started, these are your SELL side guys who leave GS or Morgan Stanley to try it on their own and then find out just how hard it is to trade your own money and how cushy they had it trading someone elses money.
Again not much help to the average investor.
5) Guys who trade esoteric instruments, usually the alphabet soup you have heard of like MBA's, CDO's, etc.
The average person can't trade these so it doesn't help them to know what a hedge fund investor is doing here.
To be honest the biggest thing that has convinced me that the average person shouldn't invest, and more importantly shouldn't listen to others about what to invest is what I glean from economists.
I'm gong to guess that I have access to better economists than 99% of hacker news and if I talk to 100 economists I'll get 50 telling me the market is going down over hte next year and 50 telling me that its gong up. And these are well credentialed people who work for well named companies and government agencies and none of them can agree on anything.
If they can't agree, it should let yo know just how much guessing the average person who has "studied the market" is doing.
TL/DR Just picking stocks is a very small niche in the hedge fund space as its just really hard to do and the ones who do well at it, often do well due to other factors such as getting in at IPO's, getting restricted stock at discounted prices, etc due to their relationship with sell side firms.
Plain old fashioned picking stocks is a crap shoot no matter who you are. Just say no.
I'll certainly agree that there is a current glut of funds chasing the same deals.
Here is why I think it might have problems. Most Hedge funds fall into a few categories, almost all of which won't help the average person invest....
1) guys who have a great understanding of one very niche area. These types of funds tend to work for a couple of years until the niche goes away, ie you might understand how prefered's work better than anyone else but sooner or later the rest of the market will catch up and your alpha goes away.
The average person can't take advantage of this as they won't have the contacts, expertise, legal ability, etc to work in these niches
2) market micro structure, these are your HFT and algorithmic guys, you just can't do this on your own so knowing what they do doesn't help you at all.
3) the warren buffets, knowing buffet's portfolio doesn't do you any good as buffet gets invited to do deals by the companies themselves at discounts to their current values, ie a company that needs cash will offer Buffet a preferred at a discount that pays a generous return.
Again this just doesn't help the average person.
4) Funds that just shouldn't have been started, these are your SELL side guys who leave GS or Morgan Stanley to try it on their own and then find out just how hard it is to trade your own money and how cushy they had it trading someone elses money.
Again not much help to the average investor.
5) Guys who trade esoteric instruments, usually the alphabet soup you have heard of like MBA's, CDO's, etc.
The average person can't trade these so it doesn't help them to know what a hedge fund investor is doing here.
To be honest the biggest thing that has convinced me that the average person shouldn't invest, and more importantly shouldn't listen to others about what to invest is what I glean from economists.
I'm gong to guess that I have access to better economists than 99% of hacker news and if I talk to 100 economists I'll get 50 telling me the market is going down over hte next year and 50 telling me that its gong up. And these are well credentialed people who work for well named companies and government agencies and none of them can agree on anything.
If they can't agree, it should let yo know just how much guessing the average person who has "studied the market" is doing.
TL/DR Just picking stocks is a very small niche in the hedge fund space as its just really hard to do and the ones who do well at it, often do well due to other factors such as getting in at IPO's, getting restricted stock at discounted prices, etc due to their relationship with sell side firms.
Plain old fashioned picking stocks is a crap shoot no matter who you are. Just say no.
I'll certainly agree that there is a current glut of funds chasing the same deals.
I think there's an opportunity for funds to service a certain class of higher-tier retail investor with a few tens of thousands to invest looking for an actively-managed vehicle capable of going long and short in a variety of markets while following a particular investment philosophy or thesis.
Institutionally-focused hedge funds can't really do this, being held as they are to their mandates. Co-investing/social investing services like Motif meet part of the need, but only as long only equity portfolio construction services.
A small team comprised of an analyst or researcher with deep expertise in a specific theme, a quantitative risk manager, and a portfolio manager/trader could maybe make a good living for themselves running a $20-30m portfolio for tips.
So I guess that's a new category 6, reliant on the aegis of something like OP's startup. That team couldn't really support themselves independently and they certainly couldn't market to the investors that might actually want to buy in.
Institutionally-focused hedge funds can't really do this, being held as they are to their mandates. Co-investing/social investing services like Motif meet part of the need, but only as long only equity portfolio construction services.
A small team comprised of an analyst or researcher with deep expertise in a specific theme, a quantitative risk manager, and a portfolio manager/trader could maybe make a good living for themselves running a $20-30m portfolio for tips.
So I guess that's a new category 6, reliant on the aegis of something like OP's startup. That team couldn't really support themselves independently and they certainly couldn't market to the investors that might actually want to buy in.
If people tend to tip 10.3% of profits vs 20% with a traditional fund, how do you attract talent? Higher volume, some kind of efficiency gains, a generally more attractive work environment, etc
20% of the profits at a hedge fund is divided among the partnership with the owner of the hedge fund getting substantially all of the economics and the junior analyst receiving nominal basis points. On Instavest the 10.3% is for the one lead investor (with the Instavest transaction fee, of course :). Also, the lead managers on Instavest have an opportunity to build their track record and brand.
Aha, I hadn't read up on your actual product. Neat idea, I like it.
The big problem though is behaviorally we e know for certain creative tasks, being motivated by scaled return can cause poor performance. Shouldn't that mean that the right strategy is to give the fund manager 2% flat fee and ditch the 20% (of course that could lead the manager to try to game getting numbers of people into their fund....o
hedge funds have consistently underperformed the market in recent years: last year the average hedge fund made 3.3%; S&P 500 index gained 11.4%.
We're in the late stages of a bull market in equities. Hedge funds are traditionally set up to protect assets or even generate returns in downturns; one of the things you trade away for that safety is full participation in market gains. So I'd expect a canonical, 'good' hedge fund to underperform a bit in an upswing but be flat or potentially even positive in a down market.
The article talks a bit in the second half about how hedge funds achieve this - where the 'hedge' comes from - so the insight is there if you think hard about it: you have to pay for the hedge somehow, and it comes out of your upside participation.
The reason hedge funds are falling out of favor is more to do with a surfeit of crappy funds, which again the article hints at but is too polite to explain. A lot of that collective underperformance post 2008 is down to a huge population of 'me too' equity long/short funds all following rote strategies. That statistic conceals the limited number of cleverly managed, fast moving funds which were able to take contrary positions in the credit bubble and protect their investor's money by shorting CDSs.
All of which is to say, the industry needs a shakeup and maybe this variable fee structure has a role to play. Good luck to them.