Management company expenses
The management company of a fund is required to cover the overhead
expenses of the fund, including salaries, benefits, rent, health insurance, and the cost of fund-related hardware and software.
• The management company may be required to:
– bear travel and entertainment expenses for monitoring investments;
– pay fees for consultants for specialized or technical services related to the business of issuers of securities held by the fund;
– bear broken deal expenses (although break-up fees are typically
expenses of the fund).
• The management company covers the majority of its expenses out of the
management fees it collects.
• Transaction fees may also provide sources of expense coverage.
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