The distribution of fund returns is often done through a distribution waterfall.   The returns generated by the investment are first spent to return the initial capital of each investor, including the manager.   These are not interest-borne, as they are a repayment of capital (i.e. no interest). Second, returns are paid to investors other than managers up to a certain pre-agreed return (the “obstacle rate” or the “preferred return”).  The usual obstacle rate is 7 to 9% per year.   Third, executives are paid returns until they have also received a return comment of the obstacle rate (the “catch-up hunt”).  Not all funds provide for an obstacle and a catch-up hunt. Often, during the catch-up period, returns are distributed with the manager who gets the largest (p.B 80%) .B. until the manager`s catch-up percentage is collected.
Fourth, once the executive`s returns match the returns of the investors, the distribution is reversed, the executive being weaker (often 20%) and investors take the highest (often 80%) Let`s free him.  All performance by managers above the manager`s initial contribution is carried interest.  Technically, investor returns are also supplied with interest, but this term is generally used only for executive returns. Interest or carry is a share of the profits of an investment paid to the investment manager that goes beyond the amount the manager contributes to the partnership, particularly in alternative investments (private equity and hedge funds). It is a service charge that rewards the manager for improving performance.  The objective of performance pricing is to ensure that managers have skin in the game, i.e. that they agree on the incentives of managers and investors.  The structure also enjoys favourable tax treatment in the United States.
 If Hearst until ` , has not executed an agreement Will Carry that is acceptable to Hearst with respect to a station promoted at the time of this agreement by Hearst for a “must carry” promotion, Hearst, once selected, can choose “must” for that station, and Hearst will have it announced in advance. The Finance Act of 1972 provided that profits from investments acquired on the basis of rights or opportunities offered to individuals as directors or employees were taxed as income and not as capital gains, subject to various exceptions. This may be strictly true for the transferred interests of many venture capitalists, even if they were partners and not employees of the investment fund, as they were often directors of investment firms. In 1987, the Inland Revenue and the British Venture Capital Association (BVCA)) entered into an agreement that, in most cases, profits from paid interest were not taxed as proceeds. The transferred interest is not automatic; it is created only if the fund generates profits exceeding a certain level of return, often referred to as the obstacle rate. If the performance of the obstacle is not reached, the Compleifnichter will not receive a promotion, although sponsors receive their proportionate share.