Hi all,
I have real case need for computing gross of management fee IRR for a closed ended Fund.
The computation is quite simple, CFs in (from investors) at time 0, CFs out (capital repayments and dividend to investors) during the time.
Management fees are paid from the Fund to the management company during the time period, thus not at the end.
The solution I am proposing is to add them all tougher to final distribution in order to have it gross of fees.
Alternative solution (with which I do not agree) is to consider management fees as CFs out at the time they are paid, from my point of view doing so should be misleading due to the higher time weight given by the IRR.
I am not able to find any relevant explanation in CFAI books and neither in GIPS guideline, does anyone have any references which I could use?
Thanks in advance,