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Up1
Management fees in private equity are ________ those in hedge funds in that _________.
- different from; fees are based on committed capital, not assets under
management - similar to; fees are based on assets under management
- different from; fees are based on assets under management, not committed
capital
- different from; fees are based on committed capital, not assets under
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Up2
Hedge
fund fees are usually calculated as a percentage of assets under management. That is, the
total amount invested, plus/minus any returns to date.Private
equity fees, on the other hand, are based on committed capital. In order to invest in a new fund, an investor
might be required to commit $1M over the course of the next five years. Perhaps
there is a schedule, $500K the first year, $300K, $150K, then $50K the last
year. Where hedge funds would charge fees over $500K in the first year, private
equity would use the full $1M. -
Up0
Woo! I got it right.
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