Fund manager fee squabble continues
22 November 2013 London
Image: Shutterstock
Research by Preqin suggests that nearly half of investors in infrastructure disagree or strongly disagree that fund managers’ and investors’ interests are properly aligned when it comes to fund terms and conditions. The figures are part of the November edition of Preqin's Infrastructure Spotlight.
The 49 percent who expressed fee dissatisfaction is significantly higher than for any other alternative asset class. By comparison, 36 percent of institutional investors in hedge funds, 33 percent of institutional investors in private equity, and 28 percent of institutional investors in private real estate funds disagree that fund manager and investor interests are properly aligned.
But the research also found that 69 percent of infrastructure investors surveyed have seen a change in infrastructure fund terms in favour of investors over the last year.
Despite investor demands that fund managers move away from the traditional 2 and 20 private equity fee structure, 61 percent of 2012/2013 vintage infrastructure funds charge an investment period management fee of two percent or more.
Elliot Bradbrook, infrastructure data manager at Preqin, said: “Many institutional investors surveyed by Preqin are dissatisfied with the terms currently offered by infrastructure fund managers, demonstrating that more needs to be done to improve the alignment of fund manager and investor interests when it comes to fees and other fund terms and conditions.”
"Investors are increasingly unwilling to buy into the traditional 2 and 20 private equity fee structure when gaining exposure to lower risk-return profile infrastructure assets, and some fund managers are making concessions in this area to attract investor commitments."
The 49 percent who expressed fee dissatisfaction is significantly higher than for any other alternative asset class. By comparison, 36 percent of institutional investors in hedge funds, 33 percent of institutional investors in private equity, and 28 percent of institutional investors in private real estate funds disagree that fund manager and investor interests are properly aligned.
But the research also found that 69 percent of infrastructure investors surveyed have seen a change in infrastructure fund terms in favour of investors over the last year.
Despite investor demands that fund managers move away from the traditional 2 and 20 private equity fee structure, 61 percent of 2012/2013 vintage infrastructure funds charge an investment period management fee of two percent or more.
Elliot Bradbrook, infrastructure data manager at Preqin, said: “Many institutional investors surveyed by Preqin are dissatisfied with the terms currently offered by infrastructure fund managers, demonstrating that more needs to be done to improve the alignment of fund manager and investor interests when it comes to fees and other fund terms and conditions.”
"Investors are increasingly unwilling to buy into the traditional 2 and 20 private equity fee structure when gaining exposure to lower risk-return profile infrastructure assets, and some fund managers are making concessions in this area to attract investor commitments."
NO FEE, NO RISK
100% ON RETURNS If you invest in only one asset servicing news source this year, make sure it is your free subscription to Asset Servicing Times
100% ON RETURNS If you invest in only one asset servicing news source this year, make sure it is your free subscription to Asset Servicing Times
