Below please find a definition of “High Water Mark”

High Water Mark: If you look at many hedge fund memorandums or marketing materials you have probably seen that many hedge funds offer high water mark protections for the investor. These are the status quo within the industry now and they assure investors that profit sharing will be calculated based on a fair valuation of returns earned. Many hedge funds collect a 2% fee on all assets and then a 20% performance fee, meaning that if the fund gains 100% in one year the hedge fund gets to keep 20% of those profits and the investor keeps the other 80%. A high water mark is the highest net asset value previously seen at the end of the fiscal year.

High Water Mark Example: An investor gives a hedge fund $500k in 2006 and that investment’s value falls to $300k. In 2007 the hedge fund produces 100% returns and that investment is now worth $600k. This individual would only have to pay performance fees on that gain between the $500k and $600k, not the full 100% gain ($300k) for that year.

Free MP3 Download: To download our free 35 minute audio interview with expert Richard C. Wilson on how to succeed in the field of finance please click here.

Fast Financial Training: If you want to take your finance or business career to the next level you should explore our financial analysis certification program, or our training programs on financial modeling, investment banking, hedge funds, or private equity. All of these programs are offered on https://BusinessTraining.com

Expand Your Financial Vocabulary: Read more finance terms and definitions

Tags: High Water Mark, Hedge Fund High Water Mark, Hedge Fund of Fund High Water Mark, Hedge Fund Investor Protections, Hedge Fund High Water Mark Definition, Hedge Fund Definitions, Hedge Fund Definition, Hedge Fund Explanation

Hedge funds are often confused for other types of funds like private equity funds, mutual funds and others. So, to clear up any confusion, I recorded the following video that provides a short, clear definition of what is a hedge fund.

Video Transcript/Summary: The strategies and tips provided within this video module include:

A hedge fund is a private investment partnership where the portfolio manager typically co-invests their own assets with the assets of the clients which they manage.
Hedge funds charge a management fee and performance fee.
Management fee is typically 2%.
Performance fee is typically 20%, but has been known to reach as high as 30%.
The prime difference between a hedge fund and that of other management funds is the fact they charge both the management and performance fee.

Transcript of What is a Hedge Fund?

Hello, this is Richard Wilson and today we’re going to define What is a Hedge Fund? Hedge Fund is a private investment partnership where the portfolio manager typically co-invests their own assets with their investor’s assets. They generally charge two types of fees: a Management Fee and a Performance Fee. Hedge funds charge management fees typically of 1% to 2% and they charge performance fees of generally 10% to 20%, some actually can be as much as 30%.

What really makes a hedge fund different from other types of investment funds is the fact that they charge both a management and a performance fee. Thank you.

I hope that this video has given you a better understanding of what exactly a hedge fund is.

Your friends here at https://investmentcertifications.com

Login / Register

High Water Mark Definition

What is a Hedge Fund?

Contact

Certifications

Company

Login / Register

Contact

Certifications

Company

Save your cart?