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:
“The universe is finished; the copestone is on, and the chips were carried off a million years ago.”
—Herman Melville (1819–1891)
“A man’s interest in a single bluebird is worth more than a complete but dry list of the fauna and flora of a town.”
—Henry David Thoreau (1817–1862)
“No officer should be required or permitted to take part in the management of political organizations, caucuses, conventions, or election campaigns. Their right to vote and to express their views on public questions, either orally or through the press, is not denied, provided it does not interfere with the discharge of their official duties. No assessment for political purposes on officers or subordinates should be allowed.”
—Rutherford Birchard Hayes (1822–1893)