Starting a fund? Then you’re probably asking: What fees should I charge investors? And will investors be okay with them?
Fees often feel like a double-edged sword, especially for new fund managers. Charge too little, and you undervalue your time. Charge too much, and you risk pushback from LPs.
In this guide, we’ll break down what the best fund managers inside the Avestor’s Customizable Fund™ ecosystem are doing across different fund types and show you how to align your fee structure with both investor expectations and your fund model.
Because smart fees are a win-win for managers and their investors.
Why Fees Matter More Than You Think
A fund is a business whose fee structure is your business model. When done right, it enables fund managers to make more money as they make more money for their investors.
Passive investors don’t have any issue with compensating managers for their efforts. What they are afraid of is misaligned incentives.
When structured right, your fees tell a story:
- That you’re invested in long-term performance.
- That you value transparency.
- That your fund is built to last.
But the right fee depends on your fund’s persona, and that’s where most new managers get stuck.
There are 3 primary personas.
- Owner/Operators – actively purchase, operate and exit projects.
- Capital Allocators – seek to pool investor capital and allocate that capital to attractive investment opportunities.
- Debt Originators – actively pool capital to deploy as loans.
What You Can Charge Depends on Who You Are
Inside our Customizable Fund™ network, we’ve seen 200+ Customizable Fund™ launched by managers across these three main personas:
Owner/Operator Funds Fee Strategy:
Acquisition Fee: 1–2%
- Asset Management Fee: 1.5%–2%
- Disposition Fee: 1% (optional)
- Promote/Carry: 20–30% after preferred return
- Reimbursement Fees: For CapEx, property-level oversight
Why This Works: LPs expect operators to have “boots on the ground,” so active income fees are justified.
Capital Allocator Funds Fee Strategy:
Management Fee: 1%–2%
- Service Fee: 10%–20% of distributions received by the fund
- Due Diligence/Review Fee: Optional (varies by deal complexity)
- Why This Works: LPs see value in curated access to multiple operators, especially if those come with better terms and vetting.
Loan Originator Funds Fee Strategy:
Origination Fee: 1%–2% paid by borrower
- Yield Spread: Capture the delta between borrower interest and LP return (e.g., borrower pays 12%, LPs earn 9%)
- Why This Works: These funds are structured like banks; active underwriting justifies multiple fee layers, especially when returns are fixed.
Fee Dos and Don’ts for New Managers
🚫 Don’t: Copy-paste fees from a generic template
✅ Do: Tie each fee to a real cost, effort, or investor benefit
🚫 Don’t: Overcharge early on as trust is still being built
✅ Do: Offer tiered fees or waivers for early LPs
🚫 Don’t: Hide your fees
✅ Do: Disclose everything clearly in your pitch deck and deal disclosures
Read more on how much you can actually save with Avestor
How Avestor Helps You Structure Smarter?
When you launch a fund with Avestor, we help you:
- Model fee structures across fund types
- Separate retail vs. institutional fee classes
- Build in compliance-ready disclosures
- Automate fee collection and reporting
No guesswork. No back-end headaches. Just better fund math and investor alignment from day one.
Also, click here to know how Avestor and Meow are transforming banking for funds.
Ready to Build Your Own Fee Structure?
With 200+ fund managers using Avestor’s Customizable Fund™, we’ve seen what works and what doesn’t. Let us show you how to build a fund that’s transparent, profitable, and built for scale.
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