The challenges facing the private equity fund of funds industry are well documented. For one, the difficulties of fundraising at a tough time for smaller private equity firms are exacerbated by the growing focus on the additional layer of fees that funds of funds charge.

Eric Warner, co-chief executive and head of investor relations at Altius Associates, said: "This is the biggest issue for institutional investors who are under intense cost pressure, because overall portfolio returns are so low." Fees have started to decline, he added, with incentives and discounts for early investors.