Family offices are seeking a benefit from hedge funds and private equity funds that was once almost exclusively reserved for institutional investors: lower fees. According to a recent family office panel, fees are becoming an ever-important issue for family offices who have sought to attain higher returns through investing in multiple managers (and thus incurring multiple sets of fees) making the management and performance fees an important bargaining chip for managers looking to attract family office capital.
Absolute Return magazine, which reported on the event, quotes Bob Borden of Delegate Partners, a family office in North Carolina, explaining, “Costs matter more than they ever have.” Family offices have been having some success in inducing managers to lower fees, with some family office managers claiming single digit performance fees (a far cry from the industry standard 20%). This is an important shift in the LP-GP structure as investors gain the upper hand in some cases over capital-hungry managers willing to slice fees in order to attract family office investors.
Tags: limited partners, family office fees, family office management, hedge fund fees, performance fees, investor fees, 2 and 20 fees, management fees, family office fee structure, private equity fees, hedge fund manager fees, investor relations