Hedge Funds

Study shows most funds have high water mark


An overwhelming number of hedge funds, some 87%, use high water marks with the intention of avoiding volatility and to ensure that limited partners are paying performance fees on recoveries from draw downs, a recently published survey found.

The study, recently conducted on some 2,400 funds by the Fitzovia group, also shows that only a tiny fraction, 2% of all funds, reset their high water marks after a predefined period of time.

Other findings included the fact that one in five funds have hurdle rates, where investors will pay fees only when a benchmark is bested. And some two-thirds of