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I think you're misunderstanding how fees & carry works. The carry is not paid out until the fund returns its investment, much later, so its $2M in your example
by SeoxyS 11y ago
I think you're misunderstanding how fees & carry works. The carry is not paid out until the fund returns its investment, much later, so its $2M in your example isn't paid out until years down the line. The only way that the firm can pay salaries etc. is from the management fees.
- mathattack 11y agoI was oversimplifying, since firms with multiple funds are doing a mix of investing and harvesting at any given time. What you say is more precise - it's more accurate to view the 2/20 as base salary and bonus, especially since the former is much more predictable.