Traditional private equity drawdown funds deliver net returns comparable to municipal bonds
Tony James · Building Blackstone, Backing Costco, and Working with Munger | Tony James on The a16z Show · May 5, 2026 · at 1:13:55
Tony James, former President and COO of Blackstone, critiques fee structures and capital efficiency in traditional 10-year PE drawdown funds compared to long-hold models.
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“What I don't like about drawdown funds, the traditional private equity fund is, you know, you commit to them, they charge your management fees for a while, They find a deal, they draw it down, so your money's not been in the ground for a few years. And then a few years later, if it's a successful deal, they sell it for two, two times their money. You know, you've paid a couple of turns, a couple of 10th of turns in management fees. They take off 20% of the gain in carry, and you've got 1.4 times your money, and you've tied up your money for five years. Go buy a New York municipal bond.”
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