ETF vs Mutual Funds - ETFs trade all day, offering liquidity, while mutual funds trade only once daily after the close [2][3] - ETFs often have lower management fees due to passive index tracking, but actively managed ETFs can have higher fees [5] - Mutual funds may have minimum buy-ins around $1,000, while ETFs require only the price of one share [6] - Mutual funds can offer automatic savings plans, while ETFs provide flexibility with options trading and short selling [6][8] ETF Market Growth and Evolution - The number of mutual funds has plateaued since the beginning of the century, currently at over 6,500, down from a pre-pandemic peak [9] - ETF growth has accelerated, nearing 4,000, with assets under management at approximately $11 trillion, half of mutual funds' $22 trillion [10] - SPY (S&P 500 ETF) was launched in 1993, enabling trading of the entire S&P 500 like a stock [14][15] - QQQ (NASDAQ 100 ETF) launched in 1999, allowing trading of the NASDAQ 100 [18] - The ETF rule streamlined the launch process, leading to an explosion in ETF volume and new launches [23] - Invesco seeks to convert its QQQ fund from a fixed unit investment trust to an open-end ETF, potentially increasing its management fee income by over $600 million annually [26][29] SPY vs QQQ Performance - Since 1993, SPY's total price return is over 1,300%, while QQQ's is over 1,007% since 1999 [27] - SPY experienced a worst sell-off of -56% during the global financial crisis, while QQQ had -83% during the dot-com bust [27][28] - SPY's management fee is 00945%, approximately half that of QQQ [28] - SPY's daily trading volume is 67 million shares, equivalent to $42 billion, compared to QQQ's 40 million shares, or $23 billion [28][29]

Management Fee Increase & Industry Trends - Rocco's Capital Management is proposing a gradual increase in fixed management fees to 275% over three years [1] - This fee structure approaches the "three and 30" model seen among large multi-strategy hedge funds [2] - Multi-strategy hedge funds and others are experiencing a divergence in the hedge fund industry [2] Performance & Talent Acquisition - Rocco's has demonstrated strong performance in the last three years, with returns of 31%, 9%, and 50%, and is up 12% in the first half of the year [3] - The company cites the need to invest in top talent, research, and technology as reasons for the fee increase [5] - Increasing fees allows the company to compete with firms like Millennium and Citadel for top talent by offering competitive compensation packages [3][4] Size & Flexibility - Rocco's manages approximately $22 billion [6] - Maintaining flexibility and nimbleness becomes challenging as a hedge fund grows in size, potentially justifying the fee increase to manage growth [6] - The fee increase could be a test to gauge investor willingness to accept higher fees and potentially manage redemptions [7]