WealthBriefing recently spoke to the founder of an equities multi-manager fund and investment business about a particular approach taken towards areas such as the fees that it charges.

One way that a hedge funds business makes an impact in the battle for investors’ attention is returns after fees – even more important in a sector that has traditionally been relatively expensive.

Even though the old “2 and 20” model is not what it was (2 per cent annual management fee and 20 per cent performance fee) this is still a business that can charge more than, say, a conventional long-only fund, never mind an exchange-traded fund. According to Hedge Fund Research, the average hedge fund manager charges an annual management fee of 1.3 per cent and a performance haircut of 16 to 17 per cent. 

Zenith Alpha Management, a multi-manager fund managing equities overseen by Eschler Asset Management, an alternatives multi-manager, reckons that it has an edge on the way it makes a living. There are no management fees, and no performance fee is levied until the net return to investors is at least 10 per cent. 

“We inverted the normal relationship. Investors are assured of getting strong returns before managers get paid,” Theron de Ris (main picture), Eschler’s founder, told this news service in a call. 

The fee model is “probably unique,” he continued. “I don’t think anyone else is really doing this and it is unusual to have such a high return hurdle, with high watermark.” Zenith's single "catch-up performance fee" will compensate managers based on their return contribution, he said. "Managers delivering the goods will receive outsized benefit."

Hurdle rates tend to be less common than the high watermark approach to setting fees. Industry surveys suggest that only around one-quarter of hedge funds employ hurdles, typically set at about 5 per cent annually or linked to a cash benchmark such as SOFR. (High watermarks make sure that a fund manager can only earn a performance (incentive) fee after recovering any previous losses and generating a new peak in the fund's NAV. An argument for this approach is that it stops investors from paying performance fees twice on the same gains.)

According to an investor letter seen by WealthBriefing, Zenith has chalked up a return of 14.4 per cent inception-to-date through May 2026. 

“Zenith is trying to moderately reduce volatility without degrading the return,” de Ris said. “It is going for compelling returns with a Sharpe ratio of at least one,” he said. (The ratio describes the additional level of return provided by each additional unit of risk.)

The approach, of giving diversified access to a range of proven investors, is designed to be attractive to investors. It is well understood by many investors that emerging hedge fund managers typically outperform larger established ones, but sourcing and researching these managers takes a lot of work.

Equities
Zenith features managers with equities strategies. “We are not offering exotic Alpha like insurance-linked securities or timber,” de Ris said. He also stressed that for now, Zenith is not a seeding vehicle for startup managers, although in time it may be open to deploying capital earlier in a manager’s life.

Because the hurdle rate is so high, the four managers within Zenith (Christian Putz, Edward Lam, Oliver Mihaljevic and Theron de Ris) can only absorb relatively small amounts of capital in a way that makes it possible to get over the hurdle rate. Total capacity on the founders’ share class of Zenith is $25 million, and about half of that has been taken up. Zenith’s founder share class for the fund is aimed at sophisticated investors, wealth managers and family offices. 

“There is no particular constraint in terms of underlying liquidity,” de Ris said, pointing out that the Zenith managers only invest in listed equities. Around six to eight managers inside the founders share class amounts to a “sweet spot.” At some point Zenith might consider launching an institutional share class, allocating sleeves of capital within one pool, and the ability to absorb more capacity, he said. “This would allow us to write larger tickets,” he said.

WealthBriefing spoke to de Ris at a time when market volatility and geopolitical angst have made the risk-mitigation aspects of holding a variety of hedge fund strategies and managers appealing to parts of the wealth sector. 

As explained by Barclays in its 2026 outlook on hedge funds, throughout the 2010s, hedge fund industry growth stagnated, as annualised returns were only about 4 per cent, and funds were only able to achieve Alpha of around 50 basis points. Considering the fees charged, 50 bps did not impress investors. Flows remained scarce (there were about $30 billion per year of outflows from 2016 to 2023). However, the last two years have represented a “turnaround,” Barclays said in the report, published in February. The industry surpassed $5 trillion in assets under management after recording its first back-to-back years of double-digit returns since the 2009-2010 post-financial crisis rebound – culminating in an average of 11.2 per cent in 2025, with positive contributions across every strategy. And more favourable conditions have boosted funds’ Alpha delivery to more than 300 bps annually. 

Structure and growth potential
The Zenith fund is a BVI-approved fund and self-managed by its directors. As and when it expands to having 20 clients and assets of more than $100 million, it will formally appoint Eschler as  the UK Alternative Investment Fund Manager, de Ris said.

De Ris created Eschler in 2010; prior to that he was a senior research analyst at Indus Capital Partners. And before that, he worked at Morgan Stanley in Milan and London. He started his career at Goldman Sachs in Frankfurt and London in the mid-1990s.

Other senior figures are John Pryce-Robertson, chief operating officer and CCO; Richard Rothwell, non-executive advisor who founded Stoneware Capital in 2006 and former chair of the board of CFA UK; and Ivan Ivanov, risk consultant, formerly with Millennium Capital Partners, GAM UK and Rokos Family Office.

“Zenith came about by listening to our ecosystem. Investors and advisors asked for diversified exposure to our talented managers; and our managers asked for capital Zenith’s purpose is thus two-fold, to deliver attractive net returns to shareholders without typical multi-manager fees and to accelerate talented up-and-coming managers seeking capital to grow,” de Ris said. 

De Ris talked about lessons he learned from the legendary US investor Warren Buffett.

"On our way to the Berkshire Hathaway shareholders meeting on May 5 [2025], our taxi driver, whose day job for [more than] 20 years, was running IT at a Berkshire subsidiary (Omaha-based Oriental Trading), told us a story. After Carlyle had run the business into the ground and the new creditors planned to move the headquarters to California and fire 3,000 workers, Warren Buffett stepped in and bought the business. Standing in front of a huge auditorium of employees, Buffett started by saying there was no way he was going to let the PE firms destroy an Omaha business in his own backyard. His key message to the assembled crowd was, `If you all continue to run the business as a family-owned business, you’ll never hear from me'. Then, pointing at the CEO of Oriental Trading on stage with him, he said, `and if that doesn’t happen, you’ll hear from me'." 

"Berkshire leaves the managers of its subsidiaries alone to run their businesses, only intervening if necessary. This idea of empowering employees and managers to get on with business, while also holding them accountable, is central to Berkshire's culture," de Ris continued. "At Zenith, each manager will have total discretion over investment decisions. We are going to bet on individuals we know, work with and trust and not impose constraints on how they manage money. This hands-off approach will, however, be complemented by centralised compliance oversight and full transparency."