"Carried interest" is a form of remuneration in which fund managers receive a percentage of profits without investing capital themselves. This serves as an incentive ("incentive") for fund managers to realize share price gains ("capital gains"). The remuneration is linked to the fund's financial performance: the higher the return, the higher the carried interest. This remuneration is in addition to the management fee charged by the fund manager.

While this system incentivizes fund managers to make profits, it can also lead to speculative behavior, as fund managers are rewarded on price increases without risking price declines. This often involves significant percentages, such as 20% of profits, which is especially common in venture capital funds. Sometimes the first part of profits is disregarded, for example at 5%, so that only returns above a certain threshold are considered true performance.