Why Wellington and Capital Group’s New Private Market Funds Are Much More Expensive Than They Look
Morningstar · Jack Shannon ·
Acquired fund fee expense reporting is a mess.
Acquired fund fee expense reporting is a mess.
A major semiliquid private market fund fee item needs an overhaul. Acquired fund fee expenses, or AFFE, which are meant to capture the fees of a parent fund’s underlying funds, fall short of capturing semiliquid private market funds’ economic reality. Inconsistent disclosure practices and legal technicalities blur the picture for investors and make comparing underlying fees unduly difficult. Morningstar’s new Semiliquid Cost Estimates help investors make better fee comparisons, but acquired fund fees remain difficult, if not impossible, to normalize across funds.
What Are AFFE, and Why Do They Matter?
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