High private-equity fees pose an obstacle for smaller U.S. endowments that don’t have the negotiating power of their larger peers, said Geeta Kapadia in the article Private-Equity Fees Present Hurdles That Hobble Some Fund Investors.
High private-equity fees also pose an obstacle for smaller U.S. endowments that don’t have the negotiating power of their larger peers, said Geeta Kapadia, chief investment officer at Fordham University in New York. The school’s endowment manages about $1 billion. She said Fordham often turns to smaller, more flexible fund sponsors.
“We really want to try and make sure that the fees are appropriate for what we’re doing,” Kapadia said. “That’s really why we end up partnering with smaller [private-equity] shops because they’re more willing to have that conversation.”
She said investors should unite to demand more transparency and alignment from private-capital fund managers regarding the fees they charge.
“It’s a very visceral and very personal thing,” she added. “Every dollar that I spend on fees is a dollar that I’m not giving to a student [through]scholarships.”
