Fund expense allocation policy
The rule, applied the same way every time, with a record of each application.
Why do private funds need an expense allocation policy?
Because expenses shared among funds, co-investors and the manager must be allocated fairly and consistently with the LPA, and expense allocation is a recurring focus of regulatory examinations. A written policy, applied consistently and recorded, is the defence.
What the policy covers
Which expenses the fund bears versus the manager; how shared costs are split across funds and vehicles; how broken-deal costs are allocated to co-investors; and how exceptions are approved.
Applying it
Choose allocation keys (commitments, invested capital, ownership) per expense type and apply them mechanically.
Recording it
Keep each allocation with its key and approval, so an examiner or LP can follow it.
Questions
Does FUN/D enforce the policy?
It stores allocation rules and applies them, with a record of each.
Want to see this on your own fund?
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Sent.
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