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Commitment (or Committed Capital)

An obligation to provide a certain amount of capital to a fund. This will be requested or “drawn down” by private equity managers on a deal-by-deal basis. This amount is different from invested funds for two reasons. Firstly, most partnerships will invest only between 80% and 95% of committed funds. Second, one has to deduct the annual management fee which is supposed to cover the cost of operation of a fund.

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