Stanford University Prof. Ashby Monk advises pensions on innovative approaches to PE. He spoke with Buyouts about the dangers of pension fund complacency toward high PE fees.
You recently took to Twitter to disagree with a pension fund CIO who was happy to spend millions in PE fees to get billions in returns. Why?
In saying “millions to get billions,” you are in effect justifying a high fee to an external partner solely on the basis of the performance delivered. But defining performance in absolute terms like this tells you very little. It doesn’t tell you how much risk they took, it doesn’t tell you the strategy or whether that strategy is commoditized. It doesn’t tell you if you could and should build that strategy internally or find partners that can offer better terms.
Check out the full article, published by PE Hub: https://bit.ly/2x5c3CZ