This structure is common in private equity, hedge funds, and real estate funds. The GP handles portfolio management, fund administration, reporting, and compliance. LPs, such as institutional allocators, are passive investors. Key terms often include fee structures (e.g. 2/20), capital commitment schedules, high-water marks, and preferred return clauses. The separation of control and capital contribution aligns with fiduciary and regulatory standards, while enabling scalability and legal protection. The GP/LP model often involves reporting packs, subscription and redemption protocols, and compliance frameworks.