Private markets not immune to fee compression

Mike Taylor

Managing Editor and Publisher

25 June 2026

It was felt first by active managers and now cost-compression is spreading more broadly across the investment community to impact private market fees, according to new research by bfinance.

The research report – Pricing pressure in the turbulent twenties – finds that while private market fees had been broadly stable at the start of the 2020 even as public market costs declined, that situation has changed.

It said it appears that near two-decade decline in public market fees since the Global Financial Crisis may now be broadening out across the wider investment management industry.

The bfinance report said that in private markets, more than two-thirds of limited partners polled in a global fees survey “noted considerable fee reductions in direct lending strategies over the past three years”.

“In addition, nearly half cited reductions in infrastructure and real estate, while 39% noted lower private equity fees,” it said.

The report also highlighted the divergence of stated fees and actual fees.

It said that while private markets searches have remained broadly flat, actual fees available to investors are falling faster, driven by first-close discounts and fee holidays that do not appear in headline benchmarking data.

“This supports the downward trend identified by the global fees survey,” it said.

“Private markets are experiencing a growing divergence between stated fees and actual fees available to investors,” bfinance Senior Associate, Portfolio Solutions, Kieren Bussey said.

“Managers are increasingly using discounts, fee holidays, first-close incentives and other mechanisms that may not be visible in benchmarking data. In many cases, real pricing is moving faster than formal fee schedules suggest.”

In addition, the report finds a widening gap between investor segments. Large, established institutional allocators are best positioned to benefit from enhanced negotiating leverage, while smaller institutions and newer wealth-sector entrants have less access to favourable terms.

It said semi-liquid funds marketed to wealth clients are materially more expensive than equivalent institutional products, even after intermediary-negotiated discounts are factored in, raising pointed questions about value for money for a client segment that is already less able to access favourable terms.

The report suggests that while savings are available, not everyone is capturing them with transparency a major obstacle, particularly in private markets where complex frameworks and limited disclosure can obscure true costs.

“”The conversation is no longer simply about whether fees are falling,” Cassin said. “The more important question is who is benefiting, where the real savings are occurring, and whether investors have the visibility needed to assess value for money. As pricing structures become more complex, robust benchmarking and governance remain critical.”