Alt Investment: Carried Interest

CFA Level II Portfolio Management
#1

For the exam, there are two ways for a fund to pay carried interest as shown below,

  1. Carried interest is paid when value of total portfolio (NAV before distributions) > committed capital

  2. When the value of investment is over a certain IRR?

I am confused on the second way of calculating carried interest. This method is used when the investments within the portfolio are to be evaluated independently?

#2

Regarding the second method it is not the value that will exceed a certain IRR it is when when the investments ( in all projects included) exceeds a specific IRR like a hurdle rate