The material on this site is for financial institutions, professional investors and their professional advisers. It is for information only. Please read our Terms & Conditions, Privacy Policy and Cookies before using this site. Please see our Subscription Terms and Conditions.


All material subject to strictly enforced copyright laws. © 2021 Euromoney, a part of the Euromoney Institutional Investor PLC.

Fees: Bain Capital prompts fee debate

Bain Capital has reportedly proposed waiving the 2% management fee on several of its private equity funds.

It follows Renaissance Technology’s decision in January to reduce its fees after poor performance in 2008. It seems only a matter of time before other hedge funds start to follow suit.

"You have to question the logic of a 2% management fee in the current environment," says a hedge fund manager. "If an investor put $100 million five years ago with a manager, and that is now worth $80 million, he will have paid at least $10 million in fees to have lost $20 million in assets. That is a hefty service charge for very little service, and I can’t see investors about to accept this fee structure from now on."

Investors have started to express their dissatisfaction with the current fee structure. The Utah Retirement Systems proposed in February that hedge funds’ management fees cover operating expenses only, and that performance fees be paid either at the end of a lock-up period or be placed on a deferred schedule. With regards to covering operating expenses only, one hedge fund consultant points out that costs fall as a hedge fund gains scale. "Management fees should decrease as assets increase. They are supposed to cover the cost of operating and it is not true that a $10 billion fund costs twice as much as a $5 billion fund to run."

You have reached premium content. Please log in to continue reading.

Read beyond the headlines with Euromoney

For over 50 years, our readers have looked to Euromoney to stay informed about the issues that matter in the international banking and financial markets. Find out more about our different levels of access below.

SUBSCRIBE ONLINE TODAY

Unlimited access to Euromoney.com and Asiamoney.com

Expert comment, long reads and in-depth analysis interviews with senior finance professionals

Access the results of our market-leading annual surveys across core financial services

Access the results of our annual awards, including the world-renowned Awards for Excellence

Your print copy of Euromoney magazine delivered monthly

£73.75 per month

Billed Annually

FREE 7 DAY TRIAL

Unlimited access to Euromoney.com and Asiamoney.com, including our top stories, long reads, expert analysis, and the results of our annual surveys and awards

Sign up to any of our newsletters, curated by our editors

LOGIN NOW

Already a user?

We use cookies to provide a personalized site experience.
By continuing to use & browse the site you agree to our Privacy Policy.
I agree