Sinking HiQSmall post on the sisters HiQ Invest and DeGiro – both independent of each other but having the same parent company.

The sinking HiQ

First of all the hedge fund HiQ Invest. Founded by some former AOT traders, they received pretty good press after performing nicely in the first few years. Especially while carrying very low assets under management, some good returns have been reported (2009 in particular was good). Even won some awards a few years ago. At least they still have the pictures.

Year on year loss of 20%

Things have turned for the worse now. Last month the HiQ Invest Market Neutral fund reported a staggering loss of 8.56% in a single month. Norwegian bonds, soft commodities and vol-arb dragged down the fund. Every hedge fund has it ups and downs, but the downs outnumber the ups by wide margin. Over the last twelve months less the fund has seen a loss of over 20%.

Apart from investors withdrawing their money (at 1% cost), such a loss is killing for the fees. HiQ charges 3% management fee and 20% performance fee. But due the high watermark those performance fees won’t kick in in the foreseeable future. What to do? Gamble high stakes to get in green territory again or just live on the management fee? The tone of their monthly report (nl) suggests the last option.

DeGiro isn’t 80% cheaper

DeGiro advertised with “80% lower fees than competitors”. This may be true compared with the former discount broker Binck. However, you can’t be 80% cheaper in everything compared with all rival brokers.

Lynx, an Interactive Brokers clone, decided to take the issue to court. In The Netherlands we have a “Reclame Code Commissie”, an institution where you can complain about unfair commercials. Lynx did and won. The Reclame Code Commissie decided the slogan “DeGiro 100% broker, 80% cheaper” was misleading. DeGiro isn’t 80% but 70% less expensive compared with Lynx brokers (link, nl).

Lynx twice as expensive as DeGiro

Unbelievable. Lynx wants to have attention to the cold fact they are more than twice as expensive as DeGiro. A wet dream for every marketeer. Free commercial for DeGiro.