Capital Hurdle Rate Calculation Definition
Below please find a definition of “Capital Hurdle Rate Calculation”
Capital Hurdle Rate Calculation: The minimum return necessary for a fund manager to start collecting incentive fees. The hurdle is usually tied to a benchmark rate such as Libor or the one-year Treasury bill rate plus a spread. If, for example, the manager sets a hurdle rate equal to 5%, and the fund returns 15%, incentive fees would only apply to the 10% above the hurdle rate.
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