LACERA · Los Angeles County Employees Retirement Association · $85.2B
LACERA paid 48 cents of partnership expenses for every dollar of management fee, and that is before hedge funds
LACERA publishes, fund by fund, the partnership expenses charged to it as a line separate from the management fee. Across its private programme in the year to June 2025 it paid $401.5 million of management fees and $202.6 million of fund expenses, 50 cents on the dollar. Strip out hedge funds, where pass-through billing is the design rather than an overrun, and the ratio barely moves: $153.0 million of expenses on $316.4 million of fees.
Key numbers, and what they mean
48 cents
Of fund expenses per dollar of management fee once hedge funds are excluded entirely: $153.0 million on $316.4 million. Including them it is 50 cents. The point does not rest on the pass-through vehicles.
46 cents
The same ratio for private equity alone, on $172.9 million of fees and $79.9 million of expenses. Private credit is 48 cents. Infrastructure and natural resources, at 36 and 31 cents, are the cheapest lines in the book.
147 cents
Real estate title holding companies: $14.25 million of expenses on $9.72 million of fees. The only private category where the expense line is larger than the fee, and a reminder that the vehicle decides which line carries the cost.
$0
ClearAlpha's management fee. It still billed $10.3 million of fund expenses, 12.8% of its market value, in a year it lost money. Its own Form ADV calls this a full pass-through expense model, in lieu of a management fee.
Asset mix, June 2025
Equity33.8%
Fixed income31.2%
Private equity16.8%
Hedge funds7.9%
Real estate5.5%
Real assets4.9%
From its annual report. LACERA also reports functionally, as growth, risk reduction, real assets and credit, and files non-core private real estate under growth rather than real assets. Private equity carries a 17% target.
The read-through
From the report
Takeaway: how to apply it to a portfolio
Excluding hedge funds altogether, the private programme paid $316.4 million of management fees and $153.0 million of fund expenses, with carried interest a further $196.1 million on top.
A fee discount settles one line of a three-line stack, and the second line runs at roughly half the first across every private asset class here. Ask for the partnership expense figure in dollars for the last three years before you negotiate the fee, because you cannot judge fifteen basis points off without knowing what sits beside it.
The three funds with the largest expense lines relative to their fees are multi-strategy hedge funds. ClearAlpha charges no management fee and billed $10.3 million of expenses; TQ charges 0.5% and billed 6.3% of market value. Between them and Hudson Bay they account for 70% of all hedge fund expenses and 15% of hedge fund fees.
Read which billing model you are in before you compare two fee rates. A pass-through fund is contracted to charge its operating costs to the fund, so a low headline fee there means the cost has moved rather than shrunk. That is disclosed in the offering documents, and it is a different thing from an expense line drifting past a fee somebody negotiated down.
Fund expenses rose about 38% year on year while total management fees rose about 15%. LACERA publishes the expense figure as a single dollar number per fund and never itemises what sits inside it.
The fee is the part fixed by contract. The expense is the part that is not, and it is growing faster. California law requires this disclosure from every public pension in the state, so the schedule exists at any manager with a Californian plan in its fund. Ask for the one it already files.
The Argus lensWhether a cost lands in the fee line or the expense line is decided by the fund agreement, and almost nobody reads what that agreement actually permits the expense line to include. Reading exactly that, and telling you which model you are being offered, is what we do.
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About the source
LACERA's Total Fund Investment Cost Report for the year ended 30 June 2025, presented to its board in December 2025, discloses for every alternative vehicle the management fees, fund expenses, carried interest and portfolio company expenses as separate columns, alongside commitments, contributions, distributions and gross and net returns. The report states that it is filed in compliance with California Government Code sections 7514.7, known as Assembly Bill 2833, and 7928.710. The asset mix comes from its annual report for the same year.