[2] Management fees paid to mutual funds and other registered investment companies are set forth in the advisory agreement which must be approved by the fund's board and shareholders; in general, these fees are heavily regulated under the Investment Company Act of 1940.
[3] In a private equity fund, the management fee is an annual payment made by the limited partners in the fund to the fund's manager (e.g., the private equity firm) to pay for the private equity firm's investment operations.
Typically, the managers will also receive an incentive fee based on the performance of the fund, known as the carried interest.
In a hedge fund, the management fee is calculated as a percentage of the fund's net asset value (the total of the investors' capital accounts) at the time when the fee becomes payable.
Management fees typically range from 1% to 4% per annum, with 2% being the standard figure.