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48% Of Private Equity Separate Accounts Charge A 20% Performance Fee

48% of Private Equity Separate Accounts Charge a 20% Performance Fee, Compared to 85% of Commingled Funds by Preqin

Separate accounts and co-investments offer sophisticated investors significantly lower management and performance fees than the widely accepted “2 & 20” rate.

Figures compiled for the forthcoming 2015 Preqin Private Equity Fund Terms Advisor show the significant disparity in fees private equity fund managers offer investors in their separate accounts and co-investment opportunities, with that of commingled fund investments. When calculating performance fees, 48% of fund managers charge a 20% carry rate for separate accounts, compared to 85% of managers running commingled funds. 48% of managers charge no carried interest on co-investments, while only a quarter keep the same rate as in their main vehicle.

With regards to management fees, private equity separate accounts have a median average fee of 1.00%, and a mean average of 1.15%. In addition, 42% of fund managers will reduce or remove these fees after the initial investment phase. By comparison, almost three-quarters (73%) of commingled buyout funds currently in market...