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How do Private Equity Fees vary across Public Pensions?

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  • Juliane Begenau
  • Emil Siriwardane

Abstract

We study how investment fees vary within private-capital funds. Net-of-fee return clustering suggests that most funds have two tiers of fees, and we decompose differences across tiers into both management and performance-based fees. Managers of venture capital funds and those in high demand are less likely to use multiple fee schedules. Some investors consistently pay lower fees relative to others within their funds. Investor size, experience, and past performance explain some but not all of this effect, suggesting that unobserved traits like negotiation skill or bargaining power materially impact the fees that investors pay to access private markets.

Suggested Citation

  • Juliane Begenau & Emil Siriwardane, 2022. "How do Private Equity Fees vary across Public Pensions?," NBER Working Papers 29887, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:29887
    Note: AP CF
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    More about this item

    JEL classification:

    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
    • G23 - Financial Economics - - Financial Institutions and Services - - - Non-bank Financial Institutions; Financial Instruments; Institutional Investors
    • G24 - Financial Economics - - Financial Institutions and Services - - - Investment Banking; Venture Capital; Brokerage
    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions

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