Private equity management fees hit new low in 2025
CNBC••business
Key Points:
- Private equity firms raising funds in 2025 charged an average management fee of 1.61%, the lowest ever recorded and significantly below the traditional 2% fee rate.
- The fee compression trend is driven by a challenging fundraising environment and the consolidation of capital into larger funds, with the top 10 funds raising nearly 46% of total capital in 2025.
- Larger funds benefit from economies of scale, spreading fixed costs over more assets, which contributes to lower average fee rates, while smaller and middle-market funds tend to maintain fees closer to 2%.
- Despite lower fee rates, total fee dollars may not decline due to increasing fund sizes, though it remains uncertain if fees will drop to levels comparable to public equity
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