Sovereign Funds and External Asset Manager Fees: The Governance Connection

4 Pages Posted: 7 Jul 2016  

Paul Rose

Ohio State University - Moritz College of Law; Bocconi University - BAFFI Center on International Markets, Money, and Regulation; Tufts University - The Fletcher School of Law and Diplomacy; Fundación Instituto de Empresa, S.L. - IE Business School

Date Written: July 6, 2016

Abstract

Sovereign wealth funds (SWFs) vary widely in how they use external managers, but nearly all SWFs make significant use of external managers, particularly for alternative asset classes that are difficult to access or demand labor-intensive investment strategies, such as private equity, venture capital, and hedge fund strategies. Many SWFs — and those interested in the performance of SWFs, including government officials and citizens — are now asking whether the returns, net of fees, are worth the fees charged by these external managers. However, while external asset managers — and hedge fund and private equity managers in particular — have been criticized for their high fees (and, in 2015 in particular, high fees often coupled with poor performance), the governance and management of asset owners themselves may contribute to the problem.

Keywords: Sovereign wealth, hedge funds, private equity, asset management

JEL Classification: K1, K20, K33

Suggested Citation

Rose, Paul, Sovereign Funds and External Asset Manager Fees: The Governance Connection (July 6, 2016). Ohio State Public Law Working Paper No. 355. Available at SSRN: https://ssrn.com/abstract=2805430 or http://dx.doi.org/10.2139/ssrn.2805430

Paul Rose (Contact Author)

Ohio State University - Moritz College of Law ( email )

55 West 12th Avenue
Columbus, OH 43210
United States

Bocconi University - BAFFI Center on International Markets, Money, and Regulation ( email )

Milano, 20136
Italy

Tufts University - The Fletcher School of Law and Diplomacy ( email )

Medford, MA 02155
United States

Fundación Instituto de Empresa, S.L. - IE Business School ( email )

Calle Maria de Molina 12, Bajo
Madrid, Madrid 28006
Spain

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