Which types of fees are typically associated with hedge funds?

Hedge funds commonly charge a combination of performance fees and management fees, making this the correct choice. Management fees are often calculated as a percentage of the assets under management (AUM) and are typically charged on an annual basis. This fee compensates the fund manager for their expertise and operational efforts in managing the fund's investments.

Performance fees, on the other hand, are charged based on the fund's performance and are meant to align the interests of the fund manager with those of the investors. These fees are usually a percentage of the profits generated by the fund above a certain benchmark or "hurdle rate."

Together, these fee structures incentivize hedge fund managers to maximize returns for their investors, as higher performance results in both increased management fees and performance fees. This aligns their compensation with the success of the fund, which is a critical aspect of hedge fund operations.

Transactional fees, entry and exit fees, and subscription fees, while they may exist in certain contexts, are not the primary fees associated with hedge funds and do not typically dominate the fee structures as performance and management fees do.