What is carried interest?

Carried interest ('carry') is the GPs' share of a fund's profits — conventionally 20%, taken after LPs receive their capital back. On a fund that turns $100M into $300M, the $200M gain yields $40M of carry.

Carry is the incentive that aligns GPs with outcomes, dwarfing fees on successful funds. Premium managers occasionally command 25–30%; some funds owe carry only above a hurdle return.