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Understanding Hedge Fund Carried Interest in the U
Understanding Hedge Fund Carried Interest in the U
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Guest
Guest
Jun 16, 2025
8:58 PM
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Hedge fund carried interest refers to the share of a hedge fund’s profits allocated to fund managers as compensation, typically around 20% of earnings beyond a specified return threshold. In the United States, this form of compensation is structured to incentivize performance and align the interests of fund managers with investors. However, it is also a subject of ongoing policy debate, primarily due to its favorable tax treatment as capital gains rather than ordinary income. Understanding the implications of carried interest is crucial for fund managers, investors, and policymakers navigating the evolving regulatory and taxation landscape of the hedge fund industry. Hedge fund carried interest represents a share of profits earned by fund managers, subject to ongoing regulatory and tax scrutiny.
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