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Pruning PE Fees

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February 19, 2015

Large pension funds are increasingly going public about their opinions on PE management fees. The latest example is a report in the FT where CalPERS’ decision to reduce its PE relationships to around 150 fund managers from 300 was endorsed by the head of Melbourne-based Australian Future pension fund. He said that best practices means keeping a tight rein on fees. The Australian local government pension fund grew by some AUD 13bn in 2014 and reported a return of 13.2 per cent, which it said outperforms the “majority of Australian pooled pension funds”. It has about 25 fund managers in its portfolio and practices diversification. Besides PE, it has allocations to property and infrastructure programmes, which it says have “significantly” outperformed public equities. CalPERS has about 10.5% of its portfolio allocated to PE and aims to reach 10%, as it reported in Oct 2014. (Image source: CalPERS)

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