Investors in private equity funds (LPs, to use the industry jargon) want fund managers (GPs) to commit more of their own personal money and show they have ‘skin in the game’, claims research. Somewhat ironically, many GPs say they do not have the money to commit, or are worried about being overexposed to a single investment.

However, you can see the LPs’ point. If GPs had full confidence in the funds they were running, surely they would pile every spare penny into them. What investment vehicle could possibly be better than one you are running yourself and fully expect to be a success?

Many fund managers do invest heavily in their own funds. Jon Moulton of Better Capital backed his second AIM-quoted vehicle to the tune of £30 million, a big chunk of the £158 million it secured.

It seems only fair to expect this sort of commitment when private equity fund managers so often demand the same from the management teams of the companies they back.

However, at least private equity chiefs don’t get rewarded for failure, unlike the clowns at taxpayer-owned RBS who are still paying themselves bumper bonuses in spite of widening losses.