High Water Mark (HWM) vs Non High Water Mark defination for MAM Investor.
A High Water Mark represents the highest value that an account has reached after accounting for both profits and losses. It serves as a benchmark to calculate performance fees.
With the High Water Mark in place, performance fees are only assessed on gains that surpass this level. For example, if an account's value hits USD 10,000 and then drops, no performance fees are charged on gains until the account surpasses USD 10,000 again.
Example:
- An account starts with $10,000 and grows to $12,000...