What is Equalisation?
In the context of alternative investment funds – indeed any open-ended fund that pays incentive or performance fees – “Equalisation” is an accounting methodology designed to ensure correct and fair incentive fees are allocated between each investor in the fund.
The Equalisation process is an accounting methodology which enables each individual investor, or group of investors, who invest in a fund over the course of its lifetime to be individually assessed for their own incentive fee liability and charged accordingly. If this can be achieved, this will eliminate the problem of one investor being penalised to the advantage of another.
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This article is not intended to be financial advice and is of a general nature only that does not take into account your individual objectives, financial situation or needs. While all efforts have been made to ensure the information contained in this article is accurate, errors may occur.