Publication
23 Jun 2021 ·
Luxembourg
Management fee step down rates
2 min read
Survey Responses: Management Fees for closed-ended private funds
In closed-ended funds, once the investment period ends, there is a shift from origination to managing and preparing for exit. This change in work, depending on the type of fund, may lead to changes in the fees. This might include:
- The same rate as before, but charged on invested capital instead of total commitments (same rate on invested capital);
- No change at all on the fees charged (no change);
- A reduced rate charged on invested capital (reduced rate on capital);
- A reduced rate on commitments during the investment period with a higher rate on invested capital (increased rate on invested capital).
Which of these applies depends on the type of fund. For real estate funds, management fees are usually on committed capital during the investment period and then the same rate, but on invested capital, after the investment period.
In debt funds management fees on invested capital are more common and fixed rate management fees are common for venture capital funds.
Real Estate Sample Funds
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Venture Capital Sample Funds
