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Alternative Market Briefing

Institutional investors seek improvements in management fees in alternatives

Friday, February 27, 2015

Komfie Manalo, Opalesque Asia:

A majority of institutional investors surveyed by data provider Preqin at the end of 2014 said that improvements in the alignment of interests between investors and fund managers can be made by focusing on management fees. In the study, investors in each alternative asset class believe that more needs to be done with regards to management fees they pay on alternative fund investments.

Of the five major alternative asset classes – private equity, hedge funds, real estate, infrastructure and private debt – investors named management fees as the area that needed the most improvement with regards to alignment of interests in all asset classes but private debt. Within private debt, it was second behind the amount managers commit to their own funds.

Preqin CEO Mark O’Hare commented, "While the fees paid by investors in alternative assets funds have long been a point of contention, the last few years have seen investors become ever more vociferous. In the year that saw CalPERS announce it is withdrawing from the hedge fund asset class due to complexity and cost, it is unsurprising that institutional investors across the globe that Preqin spoke with at the end of last year named fees as the number one area where they are seeking improvement."

Preqin has witnessed the average fees of alternative assets funds fall noticeably over recent years – the mean management fee of 2......................

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