What Is a $1B Fund Equivalent to as a Business?
A rough translation from AUM into fees, carry, and comparable operating-business revenue.
Whenever I saw a fund with a certain amount of AUM, I never had a good intuition for where to place it in the hierarchy of businesses.
AUM is only the capital base. The business is the claim on that capital through management fees, performance fees, carry, promote, and similar rights.
What $1B can generate over 10 years
Illustrative gross revenue before expenses, compensation, ownership splits, taxes, hurdles, clawbacks, and realization timing.
| Strategy / structure | Base fee | Base fees over 10 years | Carry / performance fee | 10-year performance assumption | Carry / performance fees over 10 years | Total gross revenue over 10 years |
|---|---|---|---|---|---|---|
| Passive index / ETF mandate | 0.02–0.05% | $2–5M | 0% | Not return-linked | $0 | $2–5M |
| Active public-market funds & mandates | 0.25–0.50% | $25–50M | 0–5% | Mandate-specific | $0–10M | $25–60M |
| Wealth manager / RIA | 0.50–1.00% | $50–100M | 0% | Not return-linked | $0 | $50–100M |
| Private credit | 0.75–1.25% | $75–125M | 10–20% | 6–10% annual return 1.8–2.6× over 10 years | $80–320M | $155–445M |
| Real estate / infrastructure | 0.75–1.50% | $75–150M | 10–20% | 6–12% annual return 1.8–3.1× over 10 years | $80–420M | $155–570M |
| Fund-of-funds / allocator platform | 0.50–1.25% | $50–125M | 0–10% | 5–15% annual return 1.6–4.0× over 10 years | $0–300M | $50–425M |
| PE / VC / hedge fund / alts Typical to strong | 1.25–2.00% | $125–200M | 15–20% | 4.1–15% annual return 1.5–4.0× over 10 years | $80–610M | $205–810M |
| PE / VC / hedge fund / alts Breakout | 1.25–2.50% | $125–250M | 15–25% | 15–25.9% annual return 4.0–10.0× over 10 years | $450M–$2.3B | $575M–$2.5B |
| PE / VC / hedge fund / alts Exceptional outlier | 1.25–5.00% | $125–500M | 15–50% | 25–47.9% annual return 9.3–50.0× over 10 years | $1.3–24.5B | $1.4–25.0B |
Build your own case
Choose a preset, then change any field. Editing a field switches the model to Custom.
Advanced assumptions
- Average annual revenue equivalent
- $0 / year
- Base-fee revenue over selected horizon
- $0
- Carry / performance fees over selected horizon
- $0
- Total gross revenue over selected horizon
- $0
For the 10-year presets, the annual equivalent is total gross revenue over 10 years divided by 10. If the horizon changes, the model divides by that number of years instead. Cash may arrive very unevenly.
The same average annual revenue could also come from:
- 0 operating locationsat $1M of annual revenue each, such as restaurants, auto repair shops, or daycares
- 0 contractsat $100k of annual revenue per institutional customer
- 0 subscriberspaying $15 per month
- 0 e-commerce ordersat $100 of revenue per order
- $0 GMVfor a marketplace with a 10% take rate
- 0 rental homesat $2,000 per month of gross rent per home
A $1B fund can be barely a standalone business or it can produce the revenue of a substantial operating company. The difference is not AUM itself; it is the fee rights, performance economics, durability, and ownership attached to the AUM.
Methodology and limitations
Base-fee revenue is modeled on the fee base each year, with the optional annual fee-base change applied after each year. Investment value compounds at the selected gross return. Carry applies only to gains above the selected compounded hurdle. The model ignores fee step-downs, catch-ups, high-water marks, clawbacks, realization timing, operating expenses, compensation, ownership splits, and taxes. It shows simplified gross economics, not distributable earnings or enterprise value.