Hi, with regards to GIPS for PE_, under calculation:_
Net-of-fees returns must be calculated with consideration given to management fees and carried interest.
All returns must be calculated after deducting transaction expenses for the period.
For fund of funds, all returns must be net of all partnership fees, fund fees, expenses, and carried interest.
Under disclosure:
Must disclose if any other fees are deducted in addition to transaction fees for gross of fees
Must disclose if any other fees are deducted in addition to investment management fees and transaction expenses when presenting net of fees returns
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As i understood from CFAI that transaction expenses is defined as such:
For real estate (and private equity ) return calculations, the gross-of-fees return is the return on investments reduced by any transaction expenses incurred during the period. Transaction expenses include all actual legal, financial, advisory, and investment banking fees related to buying, selling, restructuring, and/or recapitalizing portfolio investments as well as any trading expenses. As with the main provisions of the GIPS standards discussed earlier in this reading, the net-of-fees return is the gross-of-fees return reduced by investment management fees.
My question is: Is it some discrepancy between the calculation & disclosure components for PE, as under calculation states " Net-of-fees returns must be calculated with consideration given to management fees and carried interest." while under disclosure states"Must disclose if any other fees are deducted in addition to investment management fees and transaction expenses when presenting net of fees returns", if so does it mean that all the time I have to be disclosing “carried interest” which is not part of transaction expenses.