Fund administration pricing falls into two camps: AUM-based fees and flat fees. For emerging managers and micro VC funds, the difference compounds significantly over the life of a fund.

This guide explains how each model works, who benefits from each, and why the fund administration industry has traditionally favored AUM pricing even when flat fees make more economic sense for most emerging managers.

How AUM-based pricing works

AUM-based fund administration charges a percentage of your total assets under management each year — typically between 0.10% and 0.20%. Most providers also apply a minimum annual fee, usually

5,000–

5,000.

AUM pricing is the dominant model because it was designed for hedge funds and large PE firms. For a $5M micro VC fund, the same logic produces a $5,000–

0,000 fee that still gets rounded up to a

5,000 minimum.

How flat fee pricing works

Flat fee fund administration charges a fixed annual amount per fund, regardless of AUM. The fee is predictable, budgetable, and directly tied to the service delivered.

Abax charges $5,000 per fund per year. That's the number whether you're running a $3M pilot fund or a $30M Fund III.

The core problem with AUM pricing for emerging managers

AUM-based pricing creates a structural misalignment. Administering a $5M fund and a

5M fund requires almost identical work. AUM pricing penalizes success — if your NAV increases, your fee goes up even though the administrator did nothing differently.

When AUM pricing might still make sense

Very large funds (
00M+): At scale, AUM pricing often produces proportionate fees.
Complex investment structures: Multiple asset classes or geographies may justify larger fees.
Bundled services: Some administrators include legal support or tax advisory.

The 10-year cost comparison

$5M fund: AUM ≈
50K–
00K. Flat fee (Abax) = $50K.
5M fund: AUM ≈
25K–$300K. Flat fee (Abax) = $50K.

5M fund: AUM ≈ $375K–$500K. Flat fee (Abax) = $50K.

These savings flow through to your net returns. Lower fund expenses mean higher net IRR for your LPs.

What to ask any fund administrator about pricing

Is the fee based on committed capital, called capital, or NAV?
Is there a minimum annual fee?
Does the fee increase if portfolio NAV increases?
Are tax filing and K-1 preparation included?
Is there a setup fee or transition fee?
Is pricing locked for the fund term?

Abax's flat $5,000/fund/year pricing eliminates AUM pricing complexity entirely. Book a call to see the numbers for your specific fund.

AUM-Based vs. Flat Fee Fund Administration: Which Is Right for Your Fund?