Private Equity & VCIntermediate
Hurdle Rate
The minimum return a fund must deliver to investors before managers earn carried interest.
Detailed explanation
Also used in corporate finance as the minimum acceptable return on a project.
Why it matters
Protects investors from paying performance fees on weak returns.
Key points
- Often around 8% in PE funds.
- Linked to carry.
- Also a capital-budgeting term.
Related terms
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Educational content only. Definitions and examples are illustrative and are not investment, tax or legal advice.