K2 Australian Small Cap Fund (Hedge Fund), (ASX code: KSM), is an Active Exchange Traded Fund (Active ETF). KSM was listed in December 2015. KSM provides exposure to an actively managed, index unaware, long/short portfolio of ASX and NZ small cap stocks with an absolute return objective. The Fund commenced as an unlisted unit trust established in November 2013 before being listed in December 2015. As at 3 July 2017, the annual management fee paid to the Manager was reduced from 2.05% to 1.31% and the performance fee has been reduced from 20.5% to 15.38%. In addition to the reduced performance fee, the performance fee hurdle has been amended. Performance fees will now be paid on returns above the high water mark after a net 6%p.a hurdle. IIR has reaffirmed a rating for the K2 Australian Small Cap Fund (Hedge Fund), (ASX: KSM). The full research review of the Hedge Fund can be accessed in the attached report.