Year-end spotlight: Management fees have to come down

As infrastructure emerges as a distinct asset class, investors want lower fees than the ‘2 and 20’ model prevalent in private equity.

While discussion on how to access infrastructure as an asset class is still ongoing, one thing is certain: 2009 was the year infrastructure emerged as a fully fledged asset class.  So it should come as no surprise that investors are starting to demand an adequate fee model.

A survey conducted by PEI Media, publisher of Infrastructure Investor, at the end of November revealed that the majority of institutional investors are overwhelmingly against the ‘2 and 20’ fee model common in private equity. For infrastructure funds, the majority of investors want management fees set below 1.4 percent with two-thirds demanding the level of carried interest drop to 15 percent or lower.

For comprehensive information on infrastructure fund management fees in 2009, consult the archived InfrastructureInvestor coverage listed on the right.