How do funds actually collect fees?
I hope this doesn't sound like a dumb question but it's something I've never known.
How do funds actually collect fees? Lets say a fund charges 2/20 for the sake of simplicity.
Does that mean a fund sells off 2% ofat the start of the reporting period, and then sells 20% of the returns at the end of the reporting period?
Or are LP's expected to provide additional cash to cover the fees?
If you're selling off a percentage of AUM how do you account for market movements when you sell?
So I think the question is how is the fee structure that we're all familiar with actually turn into cash collected to pay running costs and comp/bonuses?