Stupid question about carry
Stupid question from an ignorant M&A guy that is trying to learn the way. How is carry allocated/ how does it work in a credit hedge fund vs an equities hedge fund? For me the equities its clear, and similar in PE in the way that you earn the 20% from any capital gains you make (in PE is illiquid and takes X amount of year, and in public equities is yearly). But how does it work in a credit HF? If you are a lender you would normally wait until maturity? Is that also considered a capital gain and thus taxed lower than a standard company bonus (i.e banking)?
Thank you
Bump
For all intents and purposes, forget about earning carry at a HF for tax purposes. You might get paid a % of P&L but I've never heard of anyone getting paid carry PE-style, which by the way I believe now requires a 3 year holding period before it qualifies as long-term gains.
TLDR, forget about it.
So you pay marginal income tax rate on all forms of HF compensation? No high water mark-style carry?
To the first question, essentially yes, you pay regular wage income tax rate.
To the second, I don't see how HWM has anything to do with this discussion.
Sit eum vitae eum provident adipisci minus explicabo ullam. Optio ut in sed odit minima. Pariatur et quo non itaque quia cumque. Et ut iste laborum sit. Molestias officia non animi.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...