2024 CFA Level I Exam: CFA Study Preparation

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Basic Question 6 of 16

What are primary sources of returns for GPs?

I. Management fees.
II. Carried interests.
III. Trailer fees.
IV. Admin fees.

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User Contributed Comments 2

User	Comment
ankurwa10	Ah, saying that management fees are primary source of "returns" is stretching it. Simply because unless the fund size is huge, such small percentages (2% or lesser) - btw historical management fees have come down quite a bit to 2% or less; it would not make a world of difference in terms of returns. Carries Interest or performance fees is the bread and butter of these firms, in terms of how they make money.
pranavnmbr	thanks, ankurwa10

User

Comment

ankurwa10

Ah, saying that management fees are primary source of "returns" is stretching it. Simply because unless the fund size is huge, such small percentages (2% or lesser) - btw historical management fees have come down quite a bit to 2% or less; it would not make a world of difference in terms of returns.

Carries Interest or performance fees is the bread and butter of these firms, in terms of how they make money.

pranavnmbr

thanks, ankurwa10

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Learning Outcome Statements

explain features of private equity and its investment characteristics

CFA® 2024 Level I Curriculum, Volume 5, Module 3.