What is the purpose of a 'high-water mark' in fund compensation?
Explanation
A high-water mark prevents a manager from earning a performance fee twice on the same gains if the fund value drops and then recovers.
Other questions
Which of the following best describes the typical target investor and strategy for hedge funds?
Venture capital funds primarily invest in companies at which stage of their lifecycle?
What is the primary characteristic of Leveraged Buyout (LBO) funds?
Which of the following is an example of 'Social Infrastructure'?
Why might investing in the equity of a commodity-producing firm be problematic for gaining commodity exposure?
Which investment method is considered an entry point for investors with limited resources?
What is a primary benefit of Co-Investment for an investor?
In a limited partnership structure, who has unlimited liability?
Private equity funds typically charge management fees based on which capital metric?
Which waterfall structure is more favorable to the General Partner (GP)?
Which waterfall structure distributes all profits to LPs until they receive their initial investment and hurdle rate?
What is a 'clawback' provision designed to do?
Which of the following is considered 'Economic Infrastructure'?
Real estate investments that involve 'real estate backed loans' are classified as:
Which alternative investment category includes intangible assets such as patents?
Direct investment in alternative assets is generally reserved for which type of investor?
How do limited partners (LPs) typically participate in a fund?
What does a 'hurdle rate' signify in a fee structure?
Which form of commodity investment involves buying or selling forwards or futures?
What is a key risk management feature for LPs in a partnership structure?
Which alternative investment category includes 'Fine wines'?
A Catch-up clause in a private equity fund is intended to:
Which investment method provides 'direct investment experience alongside fund participation'?
If a Private Equity fund charges a 2 percent management fee on 100 million USD committed capital, but only 50 million USD is invested, what is the annual management fee?
What distinguishes 'Deal-by-Deal' waterfalls from 'Whole-of-Fund' waterfalls?
Which of the following is a potential disadvantage of a 'Fund Investment' method?
Digital assets are categorized under which alternative investment group?
Which entity typically has control over fund operations in a Limited Partnership?
Infrastructure investments comprising 'Roads, airports, utility grids' are best described as:
Which feature is commonly associated with Hedge Funds but not typically with mutual funds?
In the context of Private Equity, what does 'Drawdown period' refer to?
Why do Private Equity funds charge management fees on committed capital rather than invested capital?
Which characteristic best defines a 'Direct Investment' in infrastructure?
Which of the following is an example of a tangible collectible investment?
American waterfalls are also known as:
European waterfalls are also known as:
Which investment structure is 'Tax-efficient offshore/onshore' and involves a 'Master Feeder'?
What is the role of a 'General Partner' (GP) regarding fund operations?
Which of the following describes 'Physical Commodities'?
Which category of real estate includes 'Malls' and 'Office buildings'?
If an investor wants to invest in alternative assets but lacks the resources to diligence individual deals, which method is most appropriate?
What does 'Full or leveraged ownership' refer to in the context of Real Estate?
Which structure incentivizes GPs to maximize profitability in both deal-specific and aggregate terms?
In a partnership structure, what does the GP typically receive in addition to management fees?
Which of the following is considered an 'Intangible' alternative investment?
What is the primary characteristic of 'Commodities Derivatives'?
Which fund type uses borrowed money to purchase equity in established companies?
How do Hedge Funds differ from typical Real Estate investments regarding asset type?
What is the primary role of a 'Catch-up clause'?