The Math Behind Fund-of-Funds Fee Structures

Fund-of-funds charge fees on top of underlying manager fees. Understanding the math explains why it persists and what it means for managers.

Show Notes

Fund-of-funds charge fees on top of underlying manager fees. This double-fee structure is often criticized, but understanding the math explains why it persists and what it means for managers.

Fund-of-funds need their underlying managers to deliver top-quartile performance because median returns don't justify their fee layer. When pitching them, emphasize gross return potential explicitly.

Key topics: fund-of-funds, fee structures, management fees, carried interest, LP investing, capital allocation, raising capital, private equity, venture capital, emerging managers, fund managers, institutional investors, portfolio construction, alternative investments, GP-LP relationships, asset allocation, wealth building, two and twenty.

The Capital Stack — a daily briefing for anyone raising or allocating private capital: family offices, institutional investors, fund managers, and trusted advisors navigating the full investor landscape.

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What is The Capital Stack?

The Capital Stack is a daily briefing for anyone raising or allocating private capital — fund managers, family offices, institutional investors, and trusted advisors navigating the full investor landscape.

Each episode delivers a single actionable insight about how capital actually moves: how pensions and endowments make decisions, what insurance companies really want, how sovereign wealth funds operate, why family offices optimize for control over returns, and how retail capital is reshaping private markets.

Deep dives on institutional investors, life insurance companies, sovereign wealth funds, venture capital, private equity, fund-of-funds, retail wealth channels, and family offices. No interviews, no sponsor reads — just patterns, behaviors, and structural truths that help you raise smarter.

3–5 minutes. No filler. No hype.