You share only a part of earned profit when a trading period is finished.
The more trading amount you provide the higher share of profit you have
Understanding High-Water Mark
A high-water mark ensures that investors do not have to pay performance fees for poor performance, but, more importantly, guarantees that investors do not pay performance-based fees twice for the same amount of performance.
A high-water mark both protects the fund’s investors from double fees and motivates the managers to perform well, in order to earn fees.
- A high-water mark is the highest level in value an investment account or fund has reached.
- A high-water mark is often used as a demarcation point in determining performance fees that an investor must pay.
- The purpose is to protect investors from paying a fee for poor performance, and from paying a fee repeatedly every time the fund earns a profit.
- With a high-water mark, the investor pays a fee that only covers the amount the fund earned between the point of entry and its highest level