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:
“My Life had stood—a Loaded Gun—
In Corners—till a Day
The Owner passed—identified—
And carried Me away—”
—Emily Dickinson (1830–1886)
“You will think me very pedantic, gentlemen, but holiday though it may be, I have not the smallest interest in any holiday, except as it celebrates real and not pretended joys.”
—Ralph Waldo Emerson (1803–1882)
“People have described me as a “management bishop” but I say to my critics, “Jesus was a management expert too.””
—George Carey (b. 1935)