Private equity fund fees don't reflect benefits of scale

Dec 1, 2009

Hence, investors want to bring management fees charged by larger PE firms more in line with the cost of running the funds, according to a new survey.

While larger private equity funds generally have lower management fees than their smaller peers, these lower fees don't fully reflect the economies of scale enjoyed by the bigger firms. As a result, the operating economics of the largest funds are very favourable, and the management fees they earn have become a significant source of income.

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