A fee rate needs a capital basis and a calendar.
A fund can charge one annual rate on commitments during its investment period and another rate on a smaller cost basis later. Multiplying a single headline rate by the fund term can miss both changes. This calculator makes the step-down date, rate and remaining-cost assumption visible year by year.
Remaining invested cost is not NAV. Here it starts at an entered amount and falls by the same fraction at each subsequent year-end. The fee is charged on opening cost before that reduction. Actual partnership agreements can exclude write-offs, use quarterly averages, apply offsets or define the fee base differently.
The formula, made clear.
- Initial basis
- Original commitments for each investment-period year.
- Step-down
- The entered post-investment annual rate and chosen capital base apply from the following year.
- Cost reduction
- A simplifying fraction removed after each year’s fee; it does not forecast exit proceeds or distributions.
Put the numbers in context.
A $50,000,000.00 fund charging 2% for five years incurs $5,000,000.00 initially. Five later years at 1.5% on $35,000,000.00 of cost declining 20% each year add $1,764,840.00; lifetime fees are $6,764,840.00.
| Input | Example value |
|---|---|
| Fund commitments | $50,000,000.00 |
| Investment-period length | 5 years |
| Total fund term | 10 years |
| Investment-period annual fee | 2% |
| Post-investment annual fee | 1.5% |
| Post-investment fee basis | Remaining invested cost |
| Invested cost at the step-down date | $35,000,000.00 |
| Annual reduction of remaining invested cost | 20% |
| Lifetime management fee budget | $6,764,840.00 |
What this calculation assumes
Annual full-year charges, one investment period, one post-period rate, and original commitments or opening remaining invested cost as the post-period base. Cost reductions occur at year-end. No fee offsets, rebates, waivers, quarterly averaging, recycling, successor-fund triggers, extensions, taxes or fee-related capital-call timing. This budget does not implement a universal LPA or cap fees at commitments.
Methodology references
What to consider next.
Transfer the lifetime fee budget into fund deployment or reserve planning, and review expenses separately. Reconcile the chosen timing and basis with the actual agreement.
How we approach financial models →