Over half of investors in an alt assets surveyed by Preqin pinpointed management fees as the key way to align interests between PE fund managers and institutional investors. The past few years have seen institutional investors use direct and indirect ways to chip away at the complexity and cost of investing in alt assets. Fees are just one way to align interests, putting more of the PE partner’s own money into funds is another.
Preqin says LPs are having some success, and average management fees for alternative assets funds are falling steadily, particularly hedge funds.
Despite the quibbling over management fees, private equity is the most attractive asset class right now, with 59% of investors having an optimistic outlook on the asset class. It was closely followed by infrastructure investors, with 57% feeling positive about the asset class.