Carried Interest

Carried interest, or “carry” for short, is effectively a payment given to investors for investment services that is taken out from the profits of the money managed.

It can also be the proportion of a fund's profits received by the fund managers at the end of the year as compensation. It acts as a performance fee as it motivates the fund manager to achieve outstanding performance. The fund's return threshold needs to be reached before any carried interest is to be paid.