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 that reconciling of God and Mammon which Mrs. Grantly had carried on so successfully in the education of her daughter, the organ had not been required, and had become withered, if not defunct, through want of use.”
—Anthony Trollope (1815–1882)
“It is the interest of the commercial world that wealth should be found everywhere.”
—Edmund Burke (1729–1797)
“This we take it is the grand characteristic of our age. By our skill in Mechanism, it has come to pass, that in the management of external things we excel all other ages; while in whatever respects the pure moral nature, in true dignity of soul and character, we are perhaps inferior to most civilised ages.”
—Thomas Carlyle (1795–1881)