Preqin figures show that in 2007, the average annual fee on a venture fund was 2.35 per cent – the most expensive fee of any private equity type at the time – but this fell to 2.16 per cent this year, according to data based on its database of funds. For buyout funds, the fees were 2.0 per cent and 1.81 per cent respectively. (this applied to buyout funds ranging from $500 million to $999 million). For all strategies, fees fell between 2007 - a boom year for private equity - and 2010.

“Although there are early signs that the private equity fundraising market is beginning to improve, conditions look set to remain extremely competitive. As a result LPs will continue to wield influence when negotiating fund terms,” said Sam Meakin, author of the Preqin report on fees.

Like hedge funds, private equity funds typically charge an annual management fee plus a performance charge on the profit of a fund.

A survey of placement agents in private equity found that the most important thing to limited partners – investors – was how distributions are made by a fund, with an average score of 4.2 out of a possible 5. For fees, this ranked as 3.7 as an issue of importance.

However, the report found that LPs have “not had much success in shifting terms relating to distribution of proceeds”.

Many other areas of terms and conditions have moved in favour of LPs as a result of the tough fund-raising climate. Some 59 per cent of respondents to a Preqin survey said there had been movement on management fees, a strong indication that fees have gone down. However, the survey also indicated that most respondents felt that there should be a closer alignment of interests between LPs and general partners.