Private equity firms are sitting on $116 billion of assets trapped in so-called zombie funds that lie dormant but still rake in fees from investors, Reuters reported yesterday. Almost 1,200 private equity funds can be classified as "zombie"—poor-performing funds that have been retained beyond their planned life span and whose managers have little hope of raising more money—according to data from industry tracker Preqin. Despite the funds being inactive, general partners still collect management fees from investors. U.S. regulator the Securities and Exchange Commission is investigating the use of these essentially inactive funds, which critics say drain money from pension funds and other investors that would otherwise be available to reinvest or return to clients. It is part of a wider SEC probe into the private equity industry as a whole.
