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Basic Question 1 of 15

A hedge fund manager is required to achieve a minimum investment performance before he may receive any incentive allocation. This is called:

A. High water mark.
B. Hurdle rate.
C. Lock up rate.

User Contributed Comments 4

User Comment
johntan1979 High-water mark definition: The highest peak in value that an investment fund/account has reached

The high-water mark ensures that the manager does not get paid large sums for poor performance. So if the manager loses money over a period, he or she must get the fund above the high watermark before receiving a performance bonus.
lockwoju Perhaps revise the gender biased "he" to the gender neutral "the fund manager".
ashish100 Perhaps get some reading glasses @lockwoju #fail
923029 Does this exclude new money coming into the fund?
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Colin Sampaleanu

Colin Sampaleanu

Learning Outcome Statements

describe investment ownership and compensation structures commonly used in alternative investments

CFA® 2025 Level I Curriculum, Volume 5, Module 1.