Operating Expenses

This one is not written up yet

The definition above is the short version. A full explanation — how it works, a worked example and the exam traps — is still being written. In the meantime the chapter below covers it in context.

Written up from the same chapter

• CAGRThe single smoothed annual rate at which a starting value would have to grow, compounding each year, to reach the ending value over a given period.
• Catch-up RateThe rate at which residual profits go to the manager after investors have received their capital and preferred return, until the manager holds its agreed share of total profits.
• ClawbackAn investor right to recover carried interest already paid to the manager on early successful exits, when later failed investments mean the manager was overpaid across the fund's whole life.
• Concentration riskThe risk that a few positions are large enough, against the fund's capital, that one loss damages the whole portfolio — capped by SEBI at 25% of investable funds for Category I and II AIFs and 10% for Category III.
• Cyber Security RiskThe risk that an AIF's or its service providers' systems are breached, corrupted or disrupted — governed by SEBI's Cyber Security and Cyber Resilience Framework, which all AIFs had to comply with by 31 August 2025.
• Deal-by-deal distribution waterfallThe order in which a close-ended Category I or II AIF pays out the proceeds of each individual exit — expenses first, investors next, the manager last and only what is left.