Managers of new hedge funds should consider offering reduced fee rates if they want to raise money, with investors across the globe expecting hefty discounts on management and performance charges to compensate for the higher risks associated with new launches, according to Citi Prime Finance.

The Day One & Early Stage Investor Allocations to Hedge Funds report found that investors prepared to provide day one or early stage capital would be most responsive if they were offered a reduced management fee, followed by a reduced performance fee.