High-water mark
The highest net asset value per share or per investor on which a performance fee has previously been paid. A manager earns a performance fee only on gains above the high-water mark, so investors never pay twice for the same performance.
In practice
High-water marks are tracked per investor or per series in open-end funds and interact with hurdles, crystallisation frequency and equalization. They are the open-end equivalent of the protection a clawback gives LPs in a closed-end fund.
In FUN/D
FUN/D tracks high-water marks and crystallisation at the investor and series level for open-end and evergreen vehicles.
Related: Clawback · Hurdle rate · NAV · full glossary
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