Surprise to see missing the 2 and 20 rule fee structure missing in the Hedge Fund section. I have taken some SIE practice test and there are some math question to solved about 2% annual management fee and 20% performance fee
Thanks for reaching out about this. We feel this is unlikely to be tested on the SIE; most people report seeing very little or no math.
We’ll add this note to our materials for context, just in case:
Hedge funds typically charge a “2 and 20” fee structure: a 2% annual management fee on assets under management and a 20% performance fee on profits earned. The management fee covers operating costs and is charged regardless of fund performance, while the performance fee is only collected on investment gains, often subject to a high-water mark to ensure investors aren’t charged for recovering past losses.
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