Catch-up takes effect when an investor’s returns reach the defined hurdle rate, giving them an agreed level of preferred return. The manager then enters a catch-up period, in which it may receive an agreed percentage of the profits until the profit split determined by the carried interest agreement is reached.
Global Definitions Database
Also known as incentive fees, promote or carried interest, are fees charged by investment advisors, or managers, after a predetermined investment p...
A re-allocation of profits from the investor's capital account to the investment manager capital account based on the ability of the latter par...
The annualized percentage return beyond which the outperformance of net investor returns are shared with the manager.
When returns are paid to more than one party in a vehicle, the order of priority for cash flows of these is set out in the waterfall calculation.