Fund economics

Fund Size Step-Down

A fund size step-down is a change in the management fee rate or calculation base after the investment period. Check the limited partnership agreement (LPA) for its timing, base, and treatment of remaining investments.

Example: A fund may charge fees on commitments while it makes new investments, then on the cost of remaining investments afterward.

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Knowing the language helps you follow the conversation. Knowing what to ask is how you participate in it.

Understanding the terms is a first step. The Aligned Capital Program uses them to teach you how to evaluate a fund and prepare the questions to ask its manager.

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