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:
“In the old times men carried out their rights for themselves as they lived, but nowadays every baby seems born with a social manifesto in its mouth much bigger than itself.”
—Oscar Wilde (1854–1900)
“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)
“The management of fertility is one of the most important functions of adulthood.”
—Germaine Greer (b. 1939)