Fund Manager
Fund Admin Glossary: 30 Terms Every GP Should Know
Fund Admin Glossary: 30 Terms Every GP Should Know
Addhyan Negi
·
Short answer: Fund admin is the back-office work of running a private fund: keeping the books, tracking each investor's capital account, issuing capital calls and distributions, reporting to LPs and supporting audit and tax. This glossary defines the 30 terms GPs and LPs meet most often in fund administration, in plain language, with links to deeper guides.
For the service itself, see our fund admin page.
Core fund admin terms
Term | Definition |
|---|---|
Fund administrator | A provider that keeps a fund's books, investor records and reports |
Books of record | The official accounting records of the fund |
General partner (GP) | The entity that manages the fund |
Limited partner (LP) | An investor in the fund |
LPA | Limited partnership agreement: the fund's governing contract |
Side letter | An agreement giving a specific LP different terms |
Commitment | The amount an LP agrees to invest |
Unfunded commitment | The part of a commitment not yet called |
Capital activity
Term | Definition |
|---|---|
Capital call | A notice asking LPs to fund part of their commitment |
Drawdown | Another name for a capital call |
Distribution | Cash or shares returned to LPs |
Recallable distribution | A distribution the fund may call again under the LPA |
Subsequent close | A later admission of LPs after first close |
Equalization | Adjustments so late LPs bear their fair share of earlier calls and fees |
Guides: capital calls, subsequent closing equalization.
Accounting and reporting
Term | Definition |
|---|---|
Capital account | An LP's running balance in the fund |
NAV | Net asset value: fund assets minus liabilities |
Fair value | The price used to value investments under the fund's policy |
Quarterly statement | Periodic LP report showing capital account activity |
Audited financial statements | Annual statements examined by an independent auditor |
Fund accounting | Recording the fund's transactions; one part of fund administration |
Guides: LP capital accounts, fund accounting vs fund administration.
Fees and economics
Term | Definition |
|---|---|
Management fee | Annual fee paid to the manager, set in the LPA |
Management fee offset | Reduction of fees by certain income the manager receives |
Organizational expenses | Costs of forming the fund |
Carried interest | The GP's share of profits after LPs' agreed return |
Distribution waterfall | The order in which proceeds go to LPs and the GP |
Hurdle / preferred return | A return LPs receive before carry, if the LPA has one |
Tax and compliance
Term | Definition |
|---|---|
Form 1065 | US partnership tax return (IRS) |
Schedule K-1 | Each partner's share of income, deductions and credits |
Form D | Notice of an exempt securities offering filed with the SEC |
Custody rule | SEC rule on safekeeping client assets by registered advisers |
How to use this glossary
Bookmark it for LP calls and LPA reviews. When a term in your LPA doesn't match these definitions, the LPA wins. Ask counsel or your administrator how it applies to your fund.
More terms you'll see in LPAs and reports
Term | Definition |
|---|---|
First close | The first admission of LPs, when the fund can begin investing |
Final close | The last date new LPs can join under the LPA |
Investment period | The period in which the fund makes new investments |
Clawback | A GP obligation to return carry received in excess of what it's owed |
Key person clause | LPA terms triggered if named individuals stop devoting time to the fund |
Default | When an LP fails to fund a capital call |
Valuation policy | The fund's written approach to valuing investments |
Investor portal | A secure site where LPs access statements and documents |
Subscription documents | Paperwork an LP signs to join the fund |
Bridge letter | A provider's statement covering a gap after a controls report period |
Terms that are often confused
Fund admin vs fund accounting. Fund accounting is the bookkeeping. Fund admin includes the accounting plus capital calls, investor records, reporting and audit coordination. Many providers use the terms loosely; check what's in scope.
Capital account vs NAV. NAV is a fund-level figure. A capital account is one LP's share of it, adjusted for that LP's own contributions, distributions and terms.
Commitment vs contribution. A commitment is a promise to invest. A contribution is money actually sent in response to a call.
Distribution vs return of capital. A distribution is any amount paid to LPs. Whether it's treated as a return of capital or profit depends on the waterfall and the fund's accounting.
Management fee vs fund expenses. The management fee pays the manager. Fund expenses are costs the fund itself bears under the LPA. Mixing them up is one of the issues the SEC has flagged in private fund exams (SEC risk alert).
Where to go next
If you're new to the subject, start with what is fund administration for a full overview, then read what a fund administrator does day to day to see how these terms show up in practice.
A note on definitions
These definitions are simplified for clarity. Legal and accounting definitions can vary by jurisdiction, by fund structure and by the wording of a particular LPA. For a decision that matters, read the definition in your own documents and confirm with counsel or your tax adviser.
How Allocations fits
Allocations provides fund administration with a dedicated fund accountant per fund and audit support. The Fund plan is $19,500 per year, with K-1 preparation as a separate add-on.
Frequently asked questions
What is fund admin?
Fund admin is the back-office work of running a private fund: books, investor capital accounts, capital calls, distributions, LP reporting, and audit and tax support.
What is the difference between fund accounting and fund administration?
Fund accounting is recording transactions. Fund administration includes accounting plus investor services, reporting and coordination.
What is a capital account?
An LP's running balance in the fund, reflecting contributions, distributions and allocated results.
What is equalization?
Adjustments that make LPs from later closes bear their fair share of earlier calls and fees.
What is a distribution waterfall?
The order in which fund proceeds are split between LPs and the GP under the LPA.
What is a Schedule K-1?
A tax form showing each partner's share of the partnership's income, deductions and credits.
Short answer: Fund admin is the back-office work of running a private fund: keeping the books, tracking each investor's capital account, issuing capital calls and distributions, reporting to LPs and supporting audit and tax. This glossary defines the 30 terms GPs and LPs meet most often in fund administration, in plain language, with links to deeper guides.
For the service itself, see our fund admin page.
Core fund admin terms
Term | Definition |
|---|---|
Fund administrator | A provider that keeps a fund's books, investor records and reports |
Books of record | The official accounting records of the fund |
General partner (GP) | The entity that manages the fund |
Limited partner (LP) | An investor in the fund |
LPA | Limited partnership agreement: the fund's governing contract |
Side letter | An agreement giving a specific LP different terms |
Commitment | The amount an LP agrees to invest |
Unfunded commitment | The part of a commitment not yet called |
Capital activity
Term | Definition |
|---|---|
Capital call | A notice asking LPs to fund part of their commitment |
Drawdown | Another name for a capital call |
Distribution | Cash or shares returned to LPs |
Recallable distribution | A distribution the fund may call again under the LPA |
Subsequent close | A later admission of LPs after first close |
Equalization | Adjustments so late LPs bear their fair share of earlier calls and fees |
Guides: capital calls, subsequent closing equalization.
Accounting and reporting
Term | Definition |
|---|---|
Capital account | An LP's running balance in the fund |
NAV | Net asset value: fund assets minus liabilities |
Fair value | The price used to value investments under the fund's policy |
Quarterly statement | Periodic LP report showing capital account activity |
Audited financial statements | Annual statements examined by an independent auditor |
Fund accounting | Recording the fund's transactions; one part of fund administration |
Guides: LP capital accounts, fund accounting vs fund administration.
Fees and economics
Term | Definition |
|---|---|
Management fee | Annual fee paid to the manager, set in the LPA |
Management fee offset | Reduction of fees by certain income the manager receives |
Organizational expenses | Costs of forming the fund |
Carried interest | The GP's share of profits after LPs' agreed return |
Distribution waterfall | The order in which proceeds go to LPs and the GP |
Hurdle / preferred return | A return LPs receive before carry, if the LPA has one |
Tax and compliance
Term | Definition |
|---|---|
Form 1065 | US partnership tax return (IRS) |
Schedule K-1 | Each partner's share of income, deductions and credits |
Form D | Notice of an exempt securities offering filed with the SEC |
Custody rule | SEC rule on safekeeping client assets by registered advisers |
How to use this glossary
Bookmark it for LP calls and LPA reviews. When a term in your LPA doesn't match these definitions, the LPA wins. Ask counsel or your administrator how it applies to your fund.
More terms you'll see in LPAs and reports
Term | Definition |
|---|---|
First close | The first admission of LPs, when the fund can begin investing |
Final close | The last date new LPs can join under the LPA |
Investment period | The period in which the fund makes new investments |
Clawback | A GP obligation to return carry received in excess of what it's owed |
Key person clause | LPA terms triggered if named individuals stop devoting time to the fund |
Default | When an LP fails to fund a capital call |
Valuation policy | The fund's written approach to valuing investments |
Investor portal | A secure site where LPs access statements and documents |
Subscription documents | Paperwork an LP signs to join the fund |
Bridge letter | A provider's statement covering a gap after a controls report period |
Terms that are often confused
Fund admin vs fund accounting. Fund accounting is the bookkeeping. Fund admin includes the accounting plus capital calls, investor records, reporting and audit coordination. Many providers use the terms loosely; check what's in scope.
Capital account vs NAV. NAV is a fund-level figure. A capital account is one LP's share of it, adjusted for that LP's own contributions, distributions and terms.
Commitment vs contribution. A commitment is a promise to invest. A contribution is money actually sent in response to a call.
Distribution vs return of capital. A distribution is any amount paid to LPs. Whether it's treated as a return of capital or profit depends on the waterfall and the fund's accounting.
Management fee vs fund expenses. The management fee pays the manager. Fund expenses are costs the fund itself bears under the LPA. Mixing them up is one of the issues the SEC has flagged in private fund exams (SEC risk alert).
Where to go next
If you're new to the subject, start with what is fund administration for a full overview, then read what a fund administrator does day to day to see how these terms show up in practice.
A note on definitions
These definitions are simplified for clarity. Legal and accounting definitions can vary by jurisdiction, by fund structure and by the wording of a particular LPA. For a decision that matters, read the definition in your own documents and confirm with counsel or your tax adviser.
How Allocations fits
Allocations provides fund administration with a dedicated fund accountant per fund and audit support. The Fund plan is $19,500 per year, with K-1 preparation as a separate add-on.
Frequently asked questions
What is fund admin?
Fund admin is the back-office work of running a private fund: books, investor capital accounts, capital calls, distributions, LP reporting, and audit and tax support.
What is the difference between fund accounting and fund administration?
Fund accounting is recording transactions. Fund administration includes accounting plus investor services, reporting and coordination.
What is a capital account?
An LP's running balance in the fund, reflecting contributions, distributions and allocated results.
What is equalization?
Adjustments that make LPs from later closes bear their fair share of earlier calls and fees.
What is a distribution waterfall?
The order in which fund proceeds are split between LPs and the GP under the LPA.
What is a Schedule K-1?
A tax form showing each partner's share of the partnership's income, deductions and credits.
Addhyan Negi
Director of Marketing, Allocations
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Allocations secondary market is operated through Allocations Securities, LLC dba AllocationsX, member FINRA/SIPC. Check this firm on FINRA BrokerCheck. Allocations Securities, LLC is a wholly owned subsidiary of Allocations, Inc.
Copyright © Allocations Inc
Allocations secondary market is operated through Allocations Securities, LLC dba AllocationsX, member FINRA/SIPC. Check this firm on FINRA BrokerCheck. Allocations Securities, LLC is a wholly owned subsidiary of Allocations, Inc.
Copyright © Allocations Inc
Allocations secondary market is operated through Allocations Securities, LLC dba AllocationsX, member FINRA/SIPC. Check this firm on FINRA BrokerCheck. Allocations Securities, LLC is a wholly owned subsidiary of Allocations, Inc.
Copyright © Allocations Inc