Management fee Charged as a percentage of invested assets, this is the traditional mainstay of the investment industry. But some worry that since the percentage level stays the same no matter how large the fund gets, this encourages firms into “asset gathering” rather than concentrating on trying to outperform.

Meanwhile, as the hedge fund and private equity industries mature, consultants are becoming sceptical that the largest firms need management fees of 2% to meet their costs. Damien Loveday, who leads hedge-fund research at Towers Watson, said many hedge funds can - and, increasingly, do - relate the management fee to the costs of managing the firm, rather than using it as a source of profit, with many now charging 1.5% or lower.