General partner

In a limited partnership, the partner that runs the business and bears general-partner liability, often through a limited-liability entity. In a private fund it is the manager: it finds, runs and exits the investments and calls capital.

Where you will meet it

General partner appears in 8 learning outcomes on the CFA syllabus. A few of them:

• Explain how a limited partnership is organised and governed
  CFA Level I · Alternative Investments

  “The general partner sources, manages and exits investments and bears unlimited liability; the limited partners supply most of the capital, have liability capped at their commitment, and have no role in management.”

• Explain the legal forms a business can take and what each means for its owners
  CFA Level I · Corporate Issuers

  “A general partnership spreads capital and labour but leaves each partner liable for the whole; a limited partnership confines that exposure to the limited partners' contributions while the general partner retains it.”

• Explain the ways of investing privately and the vehicles used, and when each one suits an investor
  CFA Level III · Private Markets Pathway

  “The general partner manages the fund and bears general-partner liability for the partnership (in practice the GP is usually housed in a limited-liability entity), while limited partners commit capital that is called over an investment period, within a fixed, extendable term.”

• Differentiate the internal rate of return and time-weighted return when applied to alternatives
  CFA Level I · Alternative Investments

  “Private funds are different: the general partner controls the timing of drawdowns and distributions, so that timing is part of what is being judged.”

Practise it

• Today's practice question One question, with every wrong option explained.
• Free Level I diagnostic test Twelve questions that show which topics to start with.
• Free finance calculators Check your arithmetic on the exam's core formulas.

All terms beginning with G · Glossary