Abstract

Carry is a performance-related payment made to private capital fund managers (general partners of limited partnerships). Using information on fund performance and key terms of fee structures, we can estimate whether a fund owes or paid some carry (is “in-the-carry”) and the total amount (paid and due). We find that as much as 70% of invested capital is in the carry, and funds focusing on Leveraged Buy-Outs and Secondaries are nearly all in the carry (83%, 91%). On aggregate, carry exceeds one trillion dollars (over the last 25 years). Three quarter of the overall carry goes to firms based in the U.S., but less than one third of the money invested comes from the U.S. These findings may contribute to global debates on the taxation of Carry and on new drivers of wealth inequalities.

Authors

Ludovic Phalippou, University of Oxford, Said Business School