Clarification on 2% Management Fee
When we discuss a 2% management fee, I know that usually there is a drop off after the "investment period", meaning that we shouldn't charge 2% every year for a 10 year fund.
So when we discuss 2%, is this a blended rate over 10 years with a higher % for the investment period? If so, what is the recommendation for fee % during the 3-5 year investment period?
OR is the 2% for the investment period and the blended rate over 10 years is lower?
Ex. 2.5% from years 1-4 dropping to 1.25% in years 5-10 yields a blended fee of 1.75% over the 10 year period.
So when we discuss 2%, is this a blended rate over 10 years with a higher % for the investment period? If so, what is the recommendation for fee % during the 3-5 year investment period?
OR is the 2% for the investment period and the blended rate over 10 years is lower?
Ex. 2.5% from years 1-4 dropping to 1.25% in years 5-10 yields a blended fee of 1.75% over the 10 year period.