Two refers to a standard management fee of 2% of assets per year, and 20 means an incentive fee of 20% of profits above a certain threshold, known as the Threshold Rate.
This lucrative commission mechanism has led many hedge fund managers to become multimillionaires or even billionaires, but in recent years it has come under scrutiny from investors and politicians.
A high watermark can be applied to the performance fee; it states that the fund manager will only be paid a percentage of profits if the fund’s net worth exceeds its previous maximum value.
Exception 3(c)(7) pertains to a section of the Investment Company Act of the 1940s allowing qualifying private funds to be exempt from certain SEC rules.
3C1 refers to the part of the Investment Company Act of 1940 that exempts certain private equity firms from regulation.
– A firm to be defined as an investment company must comply with certain regulatory and reporting requirements set by the SEC.
Attribution analysis is an evaluation tool used to explain and analyze the performance of a portfolio (or portfolio manager), especially when compared to a certain benchmark.
in the master-feeder structure, investment funds are formed from the capital of investors; these feeder funds in turn invest in a centralized master fund.
In finance, redemption means the redemption of a fixed income security, such as a Treasury bill, certificate of deposit, or bond, on or before the due date.