> have to pay around 50% of each year's gains in taxes.
> ...will have to be paid whether or not they did or were even allowed to withdraw any money from their investments that year
That's crazy.
I would've thought the hedge fund would be able to hide the capital gains tax (as they're a trader, and should be exempted from capital gains taxes), so you as an investor only pays capital gains tax when you withdraw.
This also implies that the investor doesn't get to carry forward capital losses, or use it to offset their own outside capital gains.
> ...will have to be paid whether or not they did or were even allowed to withdraw any money from their investments that year
That's crazy.
I would've thought the hedge fund would be able to hide the capital gains tax (as they're a trader, and should be exempted from capital gains taxes), so you as an investor only pays capital gains tax when you withdraw.
This also implies that the investor doesn't get to carry forward capital losses, or use it to offset their own outside capital gains.