A follow up to our discussion of hedge funds:  Over the weekend I was able to get my hands on a data set.  Out of 4400 funds, about 3800 give the managers a 20% profits interest.  About 400 are at 10% or 15% and about 200 at 25% or 30%.  Nine funds have a 50% carry and one has a 65% carry (but no management fee).  The management fees are scattered mostly at 1, 1.5 and 2%.  Most funds have a high-water mark, and a minority have a hurdle rate or preferred return. 

Once I get more data and find someone to help me sort it out, I will have more to say.  I was not surprised by the dominance of the 20% figure, which is consistent with what I'd heard.  There is some variation, so the interesting news will come once I've figured out what causes the variation.  Does it vary according to past performance?  Strategy?  Where the fund invests?  Lock-up periods?  Whether they use a preferred return?  Is there a clientele effect?  Are management fees a substitute for the carried interest, or a complement?  More to come. 

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