A re-allocation of profits from the investor's capital account to the investment manager capital account based on the ability of the latter party to outperform a certain predetermined benchmark. Carried interest is structured as a re-allocation of equity within the capital accounts rather than a straight charge to the investment manager generally due to tax purposes.
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...
The annualized percentage return beyond which the outperformance of net investor returns are shared with the manager.
Catch-up takes effect when an investor’s returns reach the defined hurdle rate, gi...
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.