Accessing Private Markets Globally : Contracts and Costs

This paper examines contracts and the costs of accessing private markets globally. Contract terms vary by fund region and type. European funds charge lower fees than US funds, but evidence linking regulation to fee compression is weak. Investors’ costs are estimated to be 5% to 26% of committed capital. The fee drag on gross-to-net TVPI is 0.1x to 0.7x and 5% to 8% in annualized terms. While managers set fees that effectively capture excess returns, there is limited evidence of agency costs. Incentive fees are not associated with performance. Instead, higher managerial ownership is a predictor of performance