Hedge Fund High Water Market Definition
Below please find a definition of “Hedge Fund High Water Market”
Hedge Fund High Water Market: A provision serving to ensure that a fund manager only collects incentive fees on the highest net asset value previously attained at the end of any prior fiscal year — or gains representing actual profits for each investor. For example, if the value of an investor’s contribution falls to, say, $750,000 from $1 million during the first year, and then rises to $1.25 million during the second year, the manager would only collect incentive fees from that investor on the $250,000 that represented actual profits in year-two.
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