Equalization
The true-up applied when investors join a closed-end fund at a later close: late-closing LPs contribute their share of capital already called, usually plus an interest charge, and earlier LPs are partly reimbursed, so everyone ends up as if they had invested from the first close.
In practice
Equalization terms — the interest rate, whether it is paid to the fund or to earlier investors, how management fees are trued up — are set in the LPA and differ fund to fund. In open-end funds the term also refers to methods for allocating performance fees fairly between investors who subscribe at different times.
In FUN/D
FUN/D computes equalization at each subsequent close from the ledger, issues it as its own call with its own notice, and posts the reimbursements to earlier investors' capital accounts.
Related: Capital call · LPA · Management fee · full glossary
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