Carried Interest and Management Fees
Historically, carried interest has served as the primary source of income for the manager and respective firm in both private equity and hedge funds. Both private equity firms and hedge funds tended to have a small annual management fee (1% to 2% of committed capital); the management fee is meant primarily to cover the costs of investing and managing the fund rather than for meaningful wealth creation for the manager.
As the sizes of both private equity and hedge funds have increased, management fees have become a more meaningful portion of the value proposition for fund managers as evidenced by the 2007 initial public offering of the Blackstone Group.
Read more about this topic: Carried Interest
Famous quotes containing the words carried, interest and/or management:
“As for fowling, during the last years that I carried a gun my excuse was that I was studying ornithology, and sought only new or rare birds. But I confess that I am now inclined to think that there is a finer way of studying ornithology than this. It requires so much closer attention to the habits of the birds, that, if for that reason only, I have been willing to omit the gun.”
—Henry David Thoreau (1817–1862)
“Where there is no exaggeration there is no love, and where there is no love there is no understanding. It is only about things that do not interest one, that one can give a really unbiased opinion; and this is no doubt the reason why an unbiased opinion is always valueless.”
—Oscar Wilde (1854–1900)
“People have described me as a “management bishop” but I say to my critics, “Jesus was a management expert too.””
—George Carey (b. 1935)