- CFA Exams
- CFA Level I Exam
- Topic 8. Alternative Investments
- Learning Module 3. Investments in Private Capital: Equity and Debt
- Subject 1. Private Equity Investment Characteristics
CFA Practice Question
What are primary sources of returns for GPs?
II. Carried interests.
III. Trailer fees.
IV. Admin fees.
I. Management fees.
II. Carried interests.
III. Trailer fees.
IV. Admin fees.
Correct Answer: I and II
Management fees can yield very large sum of money, especially when one considers that the funds are extremely lean organizations with few employees and even fewer partners who enjoy a share of the profits.
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 |