A Fiduciary’s Framework
How to calculate the all-in cost of a private-market fund across every fund type, share class, and distribution channel — before you recommend it.
If you sit across from clients as a fiduciary, you already know the hardest question in private markets is not “is this a good fund?” It is “what does this actually cost my client, all in, once every hand in the chain has been paid?” Private-market products are engineered to lead with their smallest number. A fund can advertise a 0.10% management fee and still cost a client more than 3% a year before a dollar of performance fee is counted. The gap between the headline and the reality is where fiduciary risk lives.
This paper gives you a repeatable way to close that gap. It breaks any private-market fund into four cost layers, shows how those layers change depending on whether you access the fund directly or through an alternative-investment platform, and maps the differences across the four registered structures you will actually encounter — closed-end funds, interval funds, business development companies (BDCs), and tender-offer funds — plus the broker and advisory share classes stacked inside them. Every fee figure is drawn from public filings and disclosures, with sources cited, so you can pressure-test your own products against real numbers.
A plain truism runs underneath all of this: you don’t get paid for the risk you take, you get paid for the risk you understand. The same is true of cost. An advisor who can decompose a fund’s fee stack from memory is an advisor who can look a client in the eye and explain exactly why a given fund earned its place — or why it did not.
What You Will Gain from This Framework
- A four-layer cost model you can apply to any private-market fund, regardless of wrapper.
- A side-by-side map of listed closed-end funds, interval funds, non-traded BDCs, and tender-offer funds, including how each delivers liquidity.
- A clear view of what direct placement, platform feeders, and share classes each add to a client’s all-in cost.
- A seven-question worksheet your team can run before recommending any private-market fund.
