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Private equity management fees hit new low in 2025
A view of the New York Stock Exchange (NYSE) on Wall Street November 13, 2024, in New York City.
Angela Weiss | AFP | Getty Images
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Private equity firms that raised funds in 2025 charged the lowest average management fee rates ever recorded, continuing a multiyear downward trend.
Buyout funds of last year’s vintage asked investors to pay a mean rate of 1.61% of assets, according to data through June from Preqin, published in a December report. That’s well below the legacy 2% management fee that the industry has been known for since its inception.
There are a few reasons for this trend toward fee compression – and they’re not all dire. Of course, the industry has experienced a difficult few years of fundraising, requiring many managers to offer fee discounts to secure commitments. Even still, the industry raised $507 billion in aggregate capital across 856 funds during the first three quarters of 2025, which is expected to be essentially the same amount as 2024, when the final quarter of the year is tallied, according to Preqin.
In response to a difficult fundraising environment, managers have been consolidating and capital is increasingly going toward the biggest funds. Nearly 46% of the capital raised in 2025 was done so by the 10 largest funds, up from 34.5% in 2024, according to PitchBook.
The rise in prevalence of larger funds is also why fees are compressing. Funds seeking more than $1 billion contributed to dragging down the mean, while middle-market and newer, smaller firms charged closer to that 2% figure, Preqin data shows. Larger funds can spread fixed costs – such as compensation, compliance and technology – over a broader base. In other words, just because fee rates are lower doesn’t mean the fee dollars are.
“In the near-to-medium term, we expect private-equity fee compression to continue,” Preqin’s Brigid Connor wrote in the report. “We believe the biggest driver of this trend is growing fund sizes.”
However, Connor said it’s unclear whether fund sizes will grow large enough to the point where private equity fees fall to the levels of actively managed, public equity strategies.
Preqin doesn’t break out details about incentive fees, which are typically paid when assets are sold or taken public, as a proportion of the appreciation. However, so-called realizations have been muted over the last few years after an onslaught of buyouts during 2020 and 2021 created a sizable backlog. Higher rates have increased the cost of capital – a headwind for managers seeking to monetize assets at higher valuations than they paid for them.
That dynamic led to the challenging fundraising environment and also made it more difficult for managers to collect sizable incentive fees.
There’s a broad expectation that could change in 2026 – especially if there are several more rate cuts from the Federal Reserve – and the gap between buyers and sellers of assets continues to narrow.
NEW DELHI: Govt on Saturday significantly increased export duties on diesel and aviation turbine fuel to dissuade oil refiners from exporting these fuels and to ensure adequate availability in the domestic market amid ongoing tensions in West Asia. The ministry of finance issued a series of notifications hiking the export duty on diesel by more than 150% – from Rs 21.5 per litre to Rs 55.5 per litre – with immediate effect. The levy on ATF, or jet fuel, was increased from Rs 29.5 per litre to Rs 42 per litre. The export duty on petrol continues to be nil. Under the revised structure, the special additional excise duty on high-speed diesel has been raised to Rs 24 per litre, while the road and infrastructure cess now stands at Rs 36 per litre, which means a large chunk will now flow to the Centre. Govt said these duties are not meant to boost revenue, but to stop fuel exporters from taking undue advantage of price differences. The Centre had, on March 27, imposed an export duty of Rs 21.5 per litre on diesel and Rs 29.5 per litre on ATF in a bid to check windfall gains, as fuel was in short supply in international markets due to a squeeze on energy supplies amid the military conflict and export curbs imposed by China. It had also slashed excise duty on diesel and petrol to shield consumers and oil companies from the impact of high crude prices. Retail prices of automobile fuels in India have not increased despite high volatility in the international crude market, while only a small part of the international price pressure has been passed on to domestic flights. The windfall tax on exports of diesel and ATF helps the Centre partly offset the impact of the excise duty cut. On March 27, govt had estimated revenue gains from export duties at around Rs 1,500 crore in a fortnight. The further hike in export duties is likely to lead to higher revenue gains. In a statement, the ministry of petroleum had said, “At a time when international diesel prices have surged sharply, the levy is designed to disincentivise exports and ensure that refinery output is directed first tow-ards meeting domestic demand.“
Stock markets are as turbulent as they have ever been. Those not used to seeing their wealth jump and plunge from day to day might well be wary of trying them out for the first time.
But by investing for the longer term, investors who pick a stocks and sharesISA will almost certainly do better than those who play it safe by holding savings in cash – and they will never pay tax on any earnings.
The average stocks and sharesISA account is worth over £65,000, significantly higher than the typical cash ISA, which holds less than £13,500.
“With UK inflation elevated at around 3 per cent over the past year, it’s not a great time to be sitting on cash, especially given that over the past 12 months, the average stocks and sharesISA grew around 11 per cent, compared to an average return of 3.48 per cent for cash ISAs,” explained Dan Moczulski, eToro UK’s managing director.
With the new tax year’s allowance now in effect – worth £20,000 per person – we asked five experts to pick one fund they would be willing to buy into themselves.
While not recommendations for everybody, they offer food for thought, as well as better diversification and lower risk than buying individual company shares.
Scottish Mortgage FTSE 100
Annabel Brodie-Smith, communications director of the Association of Investment Companies (AIC)
Brodie-Smith is going for the Scottish Mortgage FTSE 100 investment trust managed by Baillie Gifford.
This company invests around the world in exciting private companies like SpaceX and Revolut, as well as public-listed companies like Meta, Nvidia and ASML.
Get a free fractional share worth up to £100.
Capital at risk.
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Get a free fractional share worth up to £100.
Capital at risk.
Terms and conditions apply.
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They are aiming to invest in the companies shaping the future – a mix of technology, healthcare, consumer services and more. The trust currently trades on a 5 per cent discount and has low charges of 0.31 per cent. This is an investment trust for long-term investors with a high appetite for risk.
This fund went up 27 per cent in the last year and is up 68 per cent over five years.
iShares Over 15 Years Gilts Index Fund (UK)
Alan Miller, CIO at SCM Direct
This fund tracks the FTSE Actuaries UK Conventional Gilts Over 15 Years Index and is therefore a fund investing solely in sterling-denominated UK government bonds, with a minimum remaining maturity of 15 years. It holds 27 gilts, has net assets of £2.95bn, and carries a Morningstar Gold medal.
There are no performance fees and a charge of just 0.1 per cent a year.
Miller says: “One of the most compelling opportunities in the market is hiding in plain sight: UK government bonds.
“Here’s the number that stops people in their tracks: 4.95 per cent compounded over 10 years is a 62 per cent return before charges, backed entirely by the UK government and sheltered from tax inside an ISA.”
Gilt yields are close to multi-decade highs. Locking in a yield to maturity of nearly 5 per cent inside an ISA wrapper, where all income and gains are tax-free, is exceptional by historical standards, and at an ongoing charge of just 0.1 per cent per annum, virtually nothing is lost to fees.
He adds: “Boring has rarely looked this good. It’s the kind of deal most active fund managers can only dream of offering.”
This fund is basically flat over the last year and up 9 per cent over five years. That’s because interest rates have been very low – as they are now higher, it should fare better from here.
Man Income
Paul Agnell, head of investment research, AJ Bell
Of the Man Income fund, Agnell says: “The fund’s pragmatic and analytical managers, Henry Dixon and Jack Barrat, invest in undervalued UK companies across the market cap spectrum, which are paying a yield at least in line with the market. In order to avoid value traps, the managers also look at a firm’s cashflow and assets.”
So, the team seek out undervalued and unloved companies, of which the UK market continues to present opportunities.
Their investment process centres on identifying two types of stocks: those trading below their replacement cost (what it would cost today to replace a company’s assets and operations) that are also cash generative, and those where the market appears to be undervaluing profit streams.
The fund has made an excellent start to 2026, up over 10 per cent in the first two months alone and was up 28 per cent over 2025. Banks were a key contributor over 2025, led by Lloyds, but with strong contributions also coming from Barclays and Standard Chartered.
The charge on the Man Income fund is 0.9 per cent.
Murray International
Philippa Maffioli, Blyth-Richmond Investment Managers
Murray International aims to blend global diversification with a solid income stream. The yield is around 3.5 per cent.
Maffioli says: “I like Murray International’s focus on dependable cashflows and sensible valuations, rather than chasing the highest yield. It also isn’t tied to the UK market, so you’re spreading risk across regions and currencies.”
Day-to-day decisions now sit with Martin Connaghan and Samantha Fitzpatrick, but the approach remains consistent: sustainable income with long-term growth potential. If you reinvest the dividends, it can be a strong compounding option over time.
It charges fees of 0.5 per cent. It is up 36 per cent in the last year and up 60 per cent over five years.
Pantheon Infrastructure Plc
Jonathan Moyes, head of investment research, Wealth Club
Pantheon Infrastructure Plc aims to provide investors with some diversification away from global stock markets while providing the potential for attractive equity-like returns over the longer term.
The FTSE 250 trust co-invests alongside some of the world’s leading infrastructure managers. Its portfolio includes large-scale data centres, gas distribution networks, US renewable energy and storage developers, as well as one of Europe’s leading temperature-controlled logistics and transport businesses.
Moyes says: “These assets are prized for their mission-critical nature and long-term contracted revenue streams. Nonetheless, shares in Pantheon Infrastructure change hands at an attractive 13 per cent discount to net asset value.”
That means the shares in the fund are valued more highly than the actual fund, which means easy wins – if that discount narrows. Trusts’ valuations do not always do so, while others might trade at a premium – in other words, more than the sum of their parts.
Investors should note this is a high-risk investment and should form part of a diversified portfolio. The trust has total ongoing charges of 1.29 per cent. The fund is up 30 per cent in the last year, but is too new for a five-year view.
Depending on which investment platform you use, and like any other fund, there may also be share dealing costs, so look to minimise those where you can so they don’t eat into your long-term returns.
When investing, your capital is at risk and you may get back less than invested. Past performance doesn’t guarantee future results.
Trump says US begins the process of clearing the Strait of Hormuz as a favour to countries around the world
First container vessel, MV SELEN, arrives at Karachi Port after reopening of the Strait of Hormuz. Photo: Express
The vessel MV SELEN arrived at Karachi Port on Saturday, becoming the first Pakistan-bound vessel to do so following the reopening of the Strait of Hormuz after more than a month of disruption caused by conflict in the Middle East.
In a statement, the Karachi Port Trust (KPT) said: “MV SELEN, operated by NLC (AP Line), has berthed at Karachi Port, marking the first Pakistan-bound container vessel arrival following recent disruptions in the Strait of Hormuz.”
It added that the vessel, arriving from Jebel Ali, signalled the resumption of containerised trade and reinforced confidence in maritime supply chains.
Read: First Pakistani vessel carrying oil shipment arrives via Strait of Hormuz
The KPT said the development reflected effective coordination among port, shipping and logistics stakeholders to sustain cargo operations.
Although the Strait of Hormuz had remained disrupted since the United States and Israel attacked Iran on February 28, Pakistan continued to receive oil shipments, the first of which arrived on March 18. It also facilitated the passage of other shipments, with its flagged carriers operating under arrangements with Iran, allowing containers to transit through the strait.
Meanwhile, as talks between Iran and the US began in Islamabad under Pakistan’s mediation, President Donald Trump said US forces had begun clearing the Strait of Hormuz.
“We’re now starting the process of clearing out the Strait of Hormuz as a favour to Countries all over the World,” Trump posted on social media, saying 28 Iranian mine-dropping vessels had been sunk.
Separately, US Central Command said that two US Navy warships transited the Strait of Hormuz at the start of an operation to clear the strategic waterway of mines laid by Iran.
Also Read: Trump says US will have Strait of Hormuz ‘open fairly soon’
“Today, we began the process of establishing a new passage and we will share this safe pathway with the maritime industry soon to encourage the free flow of commerce,” said Centcom commander Admiral Brad Cooper.
Amid conflicting reports from the field, Iranian state TV said no US ships had crossed the strait, a crucial transit point for global energy supplies that Tehran has effectively blocked but Trump has vowed to reopen.
The waterway, which lies on Iran’s southern coast, was one of the main points on the agenda in Islamabad for the first direct U.S.-Iranian talks in more than a decade and the highest-level discussions since the 1979 Islamic Revolution.
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