Not only does McKinsey & Co. believe there will be a reversal of fortune in the hedge fund industry by 2010, but the management consultant also says current fee structures may be history as well by then, as investors clamor for more fee disclosures. “With increased transparency, there will a shake-out of the alternatives world,” says McKinsey’s Salim Ramji in a Financial News interview. “Hedge funds that are good at generating outperformance will dominate while those relying on market exposure will have to reduce their fees.” Further, says McKinsey, institutional investors are devoting more time to developing techniques for evaluating fund performance – which could spell trouble for underachieving funds. As for fee slashing, not everyone is concerned. “I have been hearing the argument that fees will be forced down for the past 15 years, and there is no evidence of it happening,” Florence Lombard, director of the Alternative Investment Management Association, told FN. The contrary appears to be true: “In relation to the better managers,” she says, “fees have gone up.” Fees, she notes, “[do] not appear as the top issue in investor surveys.”