onelife1

dynamutt Wrote:
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> can anyone confirm how carried interest is
> calculated?
>
> say the hurdle rate is 8% and the incentive fee is
> 20%, and the fund earns 10% in reality. since
> actual return > hurdle rate, the GPs are eligible
> for carried interest. do the GPs earn 20% of 2%
> (difference between actual results and hurdle) or
> 20% of 10% (actual return)?
>
> i know how this works in real life (usually with a
> true up period to get to 80/20) but not sure how
> it works in CFA land.

In CFA land, carried interest is the % excess of beginning NAV minus committed capital. I'm assuming if they threw in a hurdle rate, we would take the difference of beginning NAV and committed capital times the % hurdle rate. Any excess would be attributed to carried interest.

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