Also known as incentive fees, promote or carried interest, are fees charged by investment advisors, or managers, after a predetermined investment performance has been attained. Carried interest represents a re-allocation of equity and should be treated accordingly for accounting, tax or regulatory purposes.
Global Definitions Database
Child terms
Catch-up
Catch-up takes effect when an investor’s returns reach the defined hurdle rate, gi...
Claw back
An arrangement in which either the investors or the manager in a vehicle agree to use their prior dividends or
The annualized percentage return beyond which the outperformance of net investor returns are shared with the manager.Hurdle Rate
Incentive fee
See definition performance fee.
Carried interest
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...
Promote
See definition Performance Fee.
Waterfall calculation
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.