Will hedge fund fees come down to earth in 2015?

NEW YORK (CNNMoney)

At the moment, investors typically pay 2% just for the privilege of letting a hedge fund manage their millions.

Even if the fund performs horribly, the manager gets to keep 2%.

And that's not all. On top of that, there's a "performance fee" where 20% of all profits go to the manager.

It's like one big bonus, and it's a key reason that top hedge fund managers make billions and land on lists of America's super rich.

Related: The 10 highest paid hedge fund managers

But sophisticated investors have had enough. They are bargaining more aggressively on fees now.

Paul Pagnato of High Tower, which manages money for about 80 high-net worth families, told CNNMoney his firm has moved to a "success fee only" format with two hedge funds. That means they only have to pay the fund manager if he or she delivers performance above zero.

They are saying goodbye to the 2% management fee.

"They liked it and have been very positive," Pagnato said of High Tower's discussions with managers. "They felt good about being innovative. Hopefully, it's something that catches on."

High Tower will now pay a performance fee when a hedge fund returns between 0 and 10% and a higher fee if the manager returns over 10%.

The idea is to incentivize managers to do well -- for themselves and for their investors.

Related: America's largest pension fund is done with hedge funds

Typical hedge fund fees have already come down a notch lately -- to about 1.75% management fee and 18% performance fee, according to David Jallits, head of Global Investment Research at Cambridge Associates, which works with large endowments around the world.

Investors are often able to get discounts when investing in a start up hedge fund. Another growing trend is to get a break on fees if a client is willing to lock up money for a three or five year time horizon.

"Funds want stable money," says Don Steinbrugge of Agecroft Partners, a hedge fund consulting and marketing firm.

But the next phase of fee negotiating is likely to be even more sophisticated. There's increasing awareness among investors over the difference between "alpha" and "beta."

Beta is the returns you derive simply because the market is going up. Think of it as the dumb money. Alpha is the the gain that's truly attributable to the manager's skill at investing.

Related: Is 'smart beta' the next big thing in investing?

"Managers have to truly prove they aren't just scraping beta out of the marketplace. They have to prove they can add alpha," Jallits says.

Soon investors could be able to approach hedge fund managers with data analysis showing that 70% of the return is beta and only 30% is from alpha.

"A manager has to prove the math wrong or be open to lowering their fees," Jallits believes.

2014 has been an interesting year for hedge funds. It's seen the largest number of fund closures since 2009.

But that doesn't mean there's less money flowing in. In fact, hedge funds have the highest amount of assets ever, according to an analysis by Steinbrugge.

Of course, no one is expecting top managers to earn less. The key is to ensure that you're paying for alpha performance.

First Published: December 22, 2014: 7:46 AM ET

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Bruce Willis' favorite Russian bank collapses

LONDON (CNNMoney)

The Hollywood hard man has been promoting Russia's Trust Bank for four years, and recently starred in a TV commercial with the catch phrase "Trust me, Trust Bank."

"In this ad for Trust Bank, I wanted to play a hero rescuing people trapped in a burning elevator. We just wanted to tell you about our terrific loans," says the star of the 'Die Hard' series of movies.

Clearly it's a message that's fallen on deaf ears in Russia, where confidence in the financial system has been rocked by a collapse in the ruble and rocketing interest rates.

Russians have been rushing to withdraw rubles and convert them into dollars, worried about the devaluation and the soaring price of imported goods.

Related: Putin blames the West for Russia's misery

The rates Russian banks lend to each other have more than doubled in the past month -- overnight rates now stand at 25% -- indicating just how serious the funding crisis has become.

Russia's central bank said Monday it would provide an emergency loan of 30 billion rubles ($545 million) to keep Trust Bank afloat and protect customers' deposits while it engineers a longer term bailout involving a bigger Russian bank.

The ruble gained ground Monday, after bouncing off a record low against the dollar last week as Russia drained billions more from reserves to buy its currency, and announced a series of measures aimed at shoring up the banking industry.

They include a plan to pump one trillion rubles ($16 billion) into Russian banks next year, and new deposit insurance that guarantees savings up to 1.4 million rubles ($23,200).

Former finance minister Alexei Kudrin said Monday Russia was entering a full blown economic crisis, with GDP likely to contract by 4% in 2015 if oil prices continue to trade around $60 a barrel.

Russian media quoted Kudrin as saying he expected a series of defaults next year and that the country's credit rating would be cut to junk.

Read next: Saudi Arabia: We'll never cut oil production

First Published: December 22, 2014: 8:45 AM ET

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All Sony wants to Christmas is ...

NEW YORK (CNNMoney)

That's obviously the last thing Sony wants. What the studio wants, instead, is a reprieve from the month-long ordeal that has crippled its operations and captivated the rest of the media world.

If the company had a Christmas list, this is what would be on it:

-- For the leaks to stop

The hackers have been threatening to release more damaging, embarrassing information about Sony (SNE) if "The Interview" is ever released.

That's why some observers interpreted last week's removal of the movie from theaters as an attempt to forestall any more leaks. But now that Sony is reconsidering its release, the studio has to be dreading more surprises.

-- A way to release "The Interview"

After canceling the Christmas theatrical release of Seth Rogen's controversial comedy, Sony is now seeking a new way for the public to see it. "We're still exploring options for distribution," a Sony spokesman said Sunday.

-- Support from other companies

Sony says it can't do it alone. Earlier this month, executives lamented the relative lack of backup from other Hollywood studios. On Friday, the association that represents all the studios weighed in with a strong statement, calling the hacking "a despicable, criminal act."

Now the studio needs backup from distributors. Netflix (NFLX, Tech30), YouTube and the association of major movie theater owners have all declined to comment on the possibility of partnering with Sony to release the movie -- for now.

-- And for the lawsuits to stop

Four lawsuits now claim that Sony was negligent for failing to stop November's cyberattack. One of the suits calls what happened "an epic nightmare, much better suited to a cinematic thriller than to real life."

The lawsuits are a reflection of the anger among past and present Sony employees. The company's bosses will be relieved -- and lucky -- if no more suits are filed.

-- A successful release of "Annie"

The family-friendly movie "Annie" could be the studio's one glimmer of good news this month. It opened in theaters on Friday and made $16 million over the weekend -- a decent but not particularly impressive debut, given its $65 million budget.

Sony is hoping the film will gain some more momentum over the Christmas and New Year's weeks.

First Published: December 22, 2014: 9:40 AM ET

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Republicans to theaters: Don't be 'bullied,' show Sony's 'The Interview'

NEW YORK (CNNMoney)

In a letter obtained first by CNN, RNC chairman Reince Priebus encouraged the CEOs of 10 major theater chains to show the controversial comedy starring Seth Rogen and James Franco.

"I want to speak clearly on behalf of the Republican Party: I urge you to show the movie," he wrote to the CEOs.

"As a sign of my commitment, if you agree to show this movie, I will send a note to the Republican Party's millions of donors and supporters urging them to buy a ticket -- not to support one movie or Hollywood, but to show North Korea we cannot be bullied into giving up our freedom," he added.

The letter continued, "Like many Americans, I'm deeply concerned that we would allow a foreign regime to dictate the movies we can and cannot watch."

The RNC petition underscored the increasingly political nature of the fracas surrounding the film and the devastating cyberattack that was directed at Sony Pictures one month before its scheduled release.

This weekend the embattled movie studio is in active discussions with potential distribution partners, figuring out if there's a way forward for the film that provoked the attack, an FBI investigation and a presidential critique of the company.

Sony representatives declined to comment on the RNC letter.

A spokesman for the association that represents theater owners did not immediately respond to a request for comment.

When debating whether to screen "The Interview" -- if Sony were to reverse its decision -- the owners have to consider a complicated set of factors, including customers' concerns about security, commitments to screen other films, and overall revenue potential.

President Obama calls out Sony: The letter comes one day after President Obama publicly chastised Sony for canceling the movie. Sony "made a mistake," the president said at an afternoon news conference.

Obama's comment led Sony Pictures CEO Michael Lynton to tell CNN's Fareed Zakaria that the president -- and others -- were "mistaken" about what had happened.

"We do not own movie theaters," Lynton said. "We cannot determine whether or not a movie will be played in movie theaters."

Lynton indicated that it was the theater owners that backed away from the film following a Tuesday threat from hackers that invoked 9/11.

Sony then canceled the film's Christmas release. But it is now seeking help to distribute the film in theaters or online.

Issue 'goes far beyond politics': The letter marks a strange bedfellows moment in the controversy over the movie, as the RNC itself acknowledged.

"As you know, the Republican Party and Hollywood have at times been at odds," the letter states. "But we can all agree that the current situation regarding the release of 'The Interview' goes far beyond politics. It is about freedom and free enterprise."

It also suggested to the theater owners and Sony (SNE) that "a share of the profits be donated to the USO or the Yellow Ribbon Fund."

The letter contributed to a feeling of national unity with regard to freedom of expression. Similar sentiments have been heard on television, in newspaper op-eds and on social media.

But at the same time, the letter did include a political shot across the aisle, accusing Obama of sending "mixed messages on this issue."

An RNC spokesman said "mixed messages" referred to the contrast between the president's comments in an ABC interview on Wednesday -- when he passed on an opportunity to criticize Sony -- and Friday, when he did.

However, the ABC interview was taped before Sony pulled the film from Christmas release.

Online reactions to the letter varied on Saturday night: While some people decried it as a publicity stunt, others said it was a necessary statement that might increase public pressure on Sony and the theater owners."

First Published: December 20, 2014: 6:00 PM ET

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Another blackout for Dish customers, this time Fox News

NEW YORK (CNNMoney)

This time it's Fox News, one of the most popular cable channels in the United States. The channel disappeared from Dish (DISH)'s lineup shortly after midnight Eastern time because Dish's contract to carry Fox News expired before it could be renewed.

Early Sunday morning, the two sides traded barbs about the reasons for the blackout, and Fox News urged its fans to switch to another television provider.

Dish replaced Fox News with The Blaze, the relatively new cable channel owned by Glenn Beck. It replaced the much smaller Fox Business Channel, which was also blacked out, with CNBC.

In its 18-year history, Fox News has never been blacked out by any major television distributor. This dispute will be particularly interesting to watch because Fox has an extraordinarily loyal audience -- a "base," so to speak, that might be motivated to drop Dish.

That's what Fox says it wants.

"Dish prematurely ceased distribution of Fox News in an attempt to intimidate and sway our negotiations," Fox News executive vice president of distribution Tim Carry said in a statement early Sunday morning.

"It is unfortunate that the millions of Fox News viewers on Dish were used as pawns by their provider. Hopefully they will vote with their hard earned money and seek another one of our other valued distributors immediately."

Encouraging viewers to switch providers is a common channel owner tactic in standoffs like this one. If history is any guide, Fox's parent company Twenty-First Century Fox (FOX) wants Dish to accept higher rates for Fox News and restore the channel as soon as possible.

The blackout comes one month to the day after CNN (the parent of this website) and other channels owned by Turner Broadcasting returned to Dish's lineup. That disruption lasted for one month and weakened CNN's ratings, since Dish beams TV to about one in every seven U.S. households that subscribe to some form of TV package.

More recently, the CBS broadcast network was blacked out for about 12 hours in some major markets due to a separate dispute between Dish and CBS Corporation (CBS).

Related: AMC uses 'The Walking Dead' to pressure DirecTV

Earlier this week, Fox News Channel's parent company 21st Century Fox started to warn that another blackout was looming. On Saturday, Fox ran warnings on-screen that urged its fans to lobby the satellite provider and said "don't let Dish control the news you watch."

After the blackout began on Sunday, Fox's web site about the negotiations echoed that message.

But Dish's point of view is that it is being aggressive on behalf of its customers, attempting to limit price increases for channels that inevitably get passed on through monthly bills.

The company said in a news release that Twenty-First Century Fox "introduced other channels into negotiations despite those channels not being included in the contract up for renewal."

Related: FCC throws out NFL blackout rule

"It's like we're about to close on a house and the realtor is trying to make us buy a new car as well," Warren Schlichting, Dish's senior vice president of programming, said in an early morning statement.

"Fox blacked out two of its news channels, using them as leverage to triple rates on sports and entertainment channels that are not in this contract."

He added, "We regret the service disruption to our customers, and remain committed to reaching an agreement that promptly returns this content to Dish's programming lineup."

First Published: December 21, 2014: 9:46 AM ET

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Is the oil scare over for the stock market?

NEW YORK (CNNMoney)

So is the oil shock over?

It depends. If you're a worker in the energy industry and live in Texas, you could feel some pain. But for everyday Americans, there's no reason to start sweating yet.

The U.S. economy is strengthening, and the Federal Reserve will seemingly will do anything to appease the stock market (you can thank Federal Reserve chair Janet Yellen for the 421-point rise in the Dow last week). These two factors are the main reason that experts are bullish about U.S. stocks in 2015.

While there could still be market wobbles in the coming days, your portfolio's oil troubles may seem like a distant memory soon.

Related: The best thing to do now for your portfolio

Oil stimulus: At its core, the U.S. economy is a consumer-driven one. So cheap gas is never a bad thing.

"Pull up to the pump at any gas station, and all you see are smiling faces," wrote Wells Fargo Advisors Senior Equity Strategist Scott Wren in market commentary last week. "And since these are Americans with dollars to burn, our guess is that this new-found money will indeed be spent - and spent quickly."

Yellen called these low prices a "net positive" for the U.S. economy, despite the headwinds it's creating for the shale oil boom.

It's not just consumers and those that cater to them that stand to benefit. Manufacturers and transportation companies should also feel the good oil vibes, Wren noted. Indeed, airlines have already taken off big time, partially due to inexpensive jet fuel.

Related: The best stocks of 2014

Upbeat economy: Despite some signs of weakening global growth, there are signs that the U.S. economy is revving up for real this time.

Employers added 321,000 jobs in November, making 2014 the strongest year for job growth since 1999. Gross domestic product, meanwhile, grew at an impressive 3.9% last quarter.

"The U.S. economy's role as the dog wagging the global economic tail likely will continue, with the robustness of the U.S. economy allowing it to buffer any global shocks," said strategists from Russell Investments in their 2015 outlook report.

Fed lovefest: Since the financial crisis, the Fed has been the best friend the market could ask for. And that bond doesn't appear to be breaking any time soon.

While investors had been nervously playing the guessing game trying to figure out when interest rates will rise, the Fed signaled earlier this week that it plans to take its sweet time in deciding when to do so.

That helped spark the biggest single-day rally in the Dow in over three years this week.

Related: Yellen: Cheap oil is good for America

"The Fed is clearly cautious about doing anything that could damage the economic recovery," noted USAA Investments in a research report. "Absent any notable increase in inflationary pressures, we believe the Fed will embrace 'lower for longer' when it comes to rates in an effort to solidify economic growth."

There's always a 'but': For all the reasons stock investors shouldn't worry about oil, there are things to keep an eye on. The energy sector, for instance, could be in for a long struggle if oil prices remain depressed. Companies with less than stellar credit that borrowed heavily to finance projects could be in particular trouble, and any defaults could reverberate across the wider high yield debt market.

Even the big guys like Exxon Mobil (XOM) and Chevron (CVX) could feel the pain, asserted Fadel Gheit, an energy analyst at Oppenheimer and Co. Those stocks have the potential to affect the broader market because of their mega market capitalizations. Some large energy producers, like ConocoPhillips, have already said they're cutting back spending due to the drop in oil prices.

Gheit predicts a wave of consolidation in the industry. He argues that as stand-alone entities, it will be almost impossible for energy companies to match the expected earnings' loss through cost cuts alone.

"The industry is ill-prepared to face the current levels of oil prices," he asserted. "The industry became complacent and they dropped their guard."

First Published: December 21, 2014: 9:18 AM ET

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Last-minute Christmas shopping guide

NEW YORK (CNNMoney)

You've already missed the deadline for free shipping from Amazon (AMZN, Tech30), for example. (It was Friday.)

But the online store says gifts ordered as late as Tuesday can still be under the tree on Thursday if you pay for one-day delivery. Some customers in major cities can even place orders by 10 a.m. on Christmas Eve and receive same-day delivery.

Hitting the stores: If you want to do your last-minute shopping the old fashioned way, expect stores to be crowded and lines to be long this weekend.

Many stores like Target (TGT) and J.C. Penney (JCP) will be open for extended hours.

Toys 'R' Us and Kohl's (KSS) will be remain open all hours until Christmas eve.

Shopping online: And you can also shop online at these same stores.

Walmart's (WMT) free shipping deadline passed (last Wednesday), but "rush shipping" is available through Monday for a fee. And if the item is in stock at a nearby store, orders for in-store pickup can be placed even on Christmas Eve.

There's still time for free shipping through Best Buy (BBY). It says orders over $35 placed by 11:30 a.m. ET on Monday qualify for free delivery by Christmas. It also offers free in-store pickup.

The deadline at Kohl's and Target is Saturday. Sears' and Macy's is Monday.

Last call at the Post Office: If you already have a gift you have to mail, that clock is ticking, too. The U.S. Postal Service will accept packages through Tuesday for Priority Mail Express. You can save a few bucks -- and time in line -- by dropping off the package by Saturday and using First Class Mail (for Christmas cards) or Priority Mail (for packages).

The deadline for Thursday delivery from UPS (UPS) and FedEx (FDX) is Tuesday.

Related: Toys 'R' Us extends hours for last-minute shoppers

Related: Mall Santa 101

First Published: December 20, 2014: 7:21 AM ET

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