Management Fee Stepdown

Summary

An investor's Management Fee is a set percentage fee calculated on the amount of an investor's assets committed or contributed to a fund. A stepdown refers to lowering either or both the rate (expressed as a percentage) and/or changing the base of assets on which that rate is calculated during the term of the fund. Typical stepdowns include lowering the rate after the investment period (on the reasoning that the fund's investments have already been made and require less active management) and/or changing the pool of assets subject to the fee (e.g., calculating the fee based on an investor's committed and unreturned capital instead of total Capital Commitment.