By Greg Roumeliotis, European Infrastructure Correspondent

AMSTERDAM, Oct 21 (Reuters) - A large number of infrastructure funds are asking for high and complex fees that put investors off the asset class, market consultancy Watson Wyatt said on Wednesday.
"The structures that currently predominate in this area are obviously a good deal for infrastructure managers but not necessarily for their investors," global head of private markets research Jane Walsh said.
Instead of charging on invested equity capital, many funds charge investors on their commitments, meaning fees are often paid for uninvested cash, Watson Wyatt said. It did not single out any funds by name for their fee structure.
However, the consultancy said it was typical to see high management fees of 1-2 percent that did not reflect the costs of running an infrastructure fund.
The firm said managers should not make incremental charges like transaction or financing fees, as this should be covered by the management fee. During the investment period, the consultancy said, the management fee should be linked to the expenses incurred by the team on running the product.
This should be limited to no more than 1 per cent per annum of committed amounts for low-risk infrastructure funds, and 1.5 per cent for higher-return targeting infrastructure funds, it said.
A hurdle rate of 8 percent and a carried interest of 20 percent with a catch-mechanism -- whereby managers initially receive a higher proportion of distributions -- are also common, Watson Wyatt said.
The consultancy said it believed there should no catch-up in infrastructure and that carried interest should only be payable on excess returns, not on total returns.
Post-investment, fees should be rebased to the acquisition cost of investment rather than net asset value, which can lead to inflated valuations, the consultancy said.

(Editing by Dan Lalor) Keywords: INFRASTRUCTURE/FEES (greg.roumeliotis@thomsonreuters.com; +31 20 504 5005; Reuters Messaging: greg.roumeliotis.reuters.com@reuters.net)

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