medium · Private Credit fund-structures-returns-economics
A private credit fund is evaluating its 'Public Market Equivalent' (PME) performance.
If the Kaplan-Schoar PME is calculated to be 0.85, what is the most accurate interpretation for the Limited Partners?
- The GP is entitled to full carried interest because the PME is positive.
- The fund generated 15% more value than the public benchmark.
- The fund underperformed the public market index on a risk-adjusted basis.
- The fund's internal rate of return is exactly 8.5%.
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