The two-percent management fee that has become standard in the hedge fund industry has changed managers’ incentives and encouraged them to become asset gatherers, according to one of the industry’s most longstanding figures.

Israel "Izzy" Englander, founder of US hedge fund firm Millennium Management, told the Terrappin Hedge 2010 conference in London this morning that the 2% management fee was arbitrarily pre-arranged as the hedge fund industry matured.