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How do fund managers generate revenue? Typically, fund managers charge management fees that cover the annual expenses of operating their investment business. Each year, approximately 2% of the total value of committed capital is paid to the fund manager to cover salaries and overhead expenses while operating the fund. Over the lifespan of a 10-year fund, these management fees would add up to 20% of the total committed capital. Investors in private funds pay these fees in order to have a professional money manager allocate their capital to investment opportunities that can generate strong investment returns.

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