I don't think that's a great example. 1/ If the lifetime of a fund is 10 years, partners don't get the management fee for ten years. They get the fee until the

I don't think that's a great example. 1/ If the lifetime of a fund is 10 years, partners don't get the management fee for ten years. They get the fee until the fund is fully invested (usually 5-6 years). 2/ Money in is capital, money out is taxable income (unless it's carry, then it's a repayment of capital/capital gains). If the fund returns nothing, you lose your capital. This creates following situation: 1/ 2% * 5 years is 10%, meaning as a partner you make 5% (probably a lot less, since you need to deduct expenses). 2/ Once we take into account taxes (let's say ~25% on $x), you are not making much, because your 10% becomes 7.5% after taxes. But GPs can't invest 5% in a fund of a few billion $/€. Then again, you can't raise that kind of money without a track record, so maybe it doesn't matter.