One corner of the investing world is surprisingly immune to the widespread trend of shrinking management fees: private equity.
Despite lower fees at firms from BlackRock Inc. to Brevan Howard Asset Management LLP and across most types of funds, many private equity managers are charging investors roughly the same amount as they were several years ago. This was on display this week in a Bloomberg News article by Janet Lorin in which Yale University’s endowment discussed how it negotiated management fees and terms.
While it could effectively push for lower costs at many types of funds, Yale said, it has "little bargaining power" in some markets, including leveraged buyout and venture capital, according to the article. Top-tier firms "present the greatest challenge" because of overwhelming investor demand, the endowment said.
Indeed, investors are piling into private equity strategies at a shocking pace, with $347 billion raised among 830 funds closed last year, bringing the industry’s assets under management to all-time high of $2.5 trillion, Preqin data show.
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Source: Bloomberg Gadfly (via The Empire Report)