Fund Breakeven AUM Calculator

What is Fund Breakeven AUM?

Fund Breakeven Assets Under Management (AUM) is the minimum amount of capital a hedge fund or private equity firm needs to manage in order to cover all of its operational expenses solely from management fees. At this threshold, the fund is neither losing money nor making a profit from its standard management fee revenue, excluding any potential performance fees or carried interest.

The calculation requires understanding fixed costs (like salaries, office rent, and legal fees) and variable costs (which scale with AUM, such as custody and administration fees). The formula subtracts the variable cost percentage from the management fee percentage to determine the net fee margin. The fixed costs are then divided by this net margin to find the breakeven point.

Mathematically:
Net Fee Margin = Management Fee % - Variable Cost %
Breakeven AUM = Fixed Costs / Net Fee Margin

Reaching the breakeven point is critical for the long-term sustainability of a fund. A firm that operates below breakeven relies on performance fees (which are unpredictable) or external capital to survive. To delve deeper into fund economics, check out our Fund of Funds Double Fee Drag Calculator or understand profit sharing via the Carried Interest Waterfall Calculator.