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 this century the writer has carried on a conversation with madness. We might almost say of the twentieth-century writer that he aspires to madness. Some have made it, of course, and they hold special places in our regard. To a writer, madness is a final distillation of self, a final editing down. It’s the drowning out of false voices.”
—Don Delillo (b. 1926)
“The interest in Wisdom is fading. Soon there will not be enough left to support the aphorism, even though it tries to amuse by half-mocking the Wisdom it propounds.”
—Mason Cooley (b. 1927)
“The management of fertility is one of the most important functions of adulthood.”
—Germaine Greer (b. 1939)