Which of the following is a typical fee associated with private equity funds?

Management fees between 1-2% of committed capital are a typical fee structure for private equity funds. These fees are charged annually and are calculated based on the total amount of capital that investors commit to the fund, rather than the amount that has been invested. The rationale behind this consistent fee model is to cover operating and administrative costs, as well as to compensate the fund managers for their ongoing efforts in managing the investments, deal sourcing, and performing due diligence.

This standard fee structure is standard across the industry, creating a predictable revenue stream for fund managers while aligning their interests with those of the investors. Investors pay management fees regardless of whether the fund is performing well or poorly, ensuring that fund managers remain incentivized to actively manage and grow the fund.

Other fees mentioned, such as annual reporting fees, administrative fees based on fund size, and exit burden fees, are less typical or not as standardized across private equity funds. Annual reporting fees may vary widely depending on specific fund requirements, administrative fees based on fund size are not universally applied or structured in the same way as management fees, and exit burden fees are not a commonplace term within private equity fee structures. Thus, the management fee of 1-2% is the most commonly recognized and understood