Webis subject to different high-water marks. Therefore, we model the incentive-fee-contract as a portfolio of call options with different strike prices. In this framework, the managerial incentives ... to properly quantify the incentives offered by the performance-based-compensation contracts of hedge fund managers and then use our measure of ... WebThe high-water mark for each investor is the maximum share value since his or her investment in the fund.2These performance fees generally range from 15% to 25% of the new profits earned each year. In addition, managers also charge a regular annual fee of 1% to 2% of portfolio assets.
High-Water Marks and Hedge Fund Compensation - Academia.edu
WebApr 6, 2009 · “ High-Water Marks and Hedge Fund Management Contracts .” Journal of Finance, 58 ( 2003 ), 1685–1717. CrossRef Google Scholar Hu, P.; Kale, J. R.; and Subramanian, A.. “ Fund Flows, Performance, Managerial Career Concerns, and Risk-Taking: Theory and Evidence .” Working Paper, Georgia State University ( 2005 ). Google Scholar WebAug 1, 2007 · We study the portfolio choice of hedge fund managers who are compensated by high-water mark contracts. We find that even risk-neutral managers do not place unbounded weights on risky assets, despite option-like contracts. Instead, they place a constant fraction of funds in a mean-variance efficient portfolio and the rest in the … desi arnaz jr boulder city
High-Water Marks and Hedge Fund Compensation - typeset.io
WebDec 28, 2024 · A high-water mark is the highest peak in value that an investment fund or account has reached. This term is often used in the context of fund manager … WebFull-text available Jan 2024 Mike Noori Asmerilda Hitaj This paper dissects the dynamics of the hedge fund industry with four financial markets, including the equity market, commodities,... WebFeb 8, 1998 · The high-water mark provisions in these contracts limit the value of the performance fees. We provide a closed-form solution to the high-water mark contract under certain conditions. This solution shows that managers have an incentive to take risks. Our results provide a framework for valuation of a hedge fund management company. desi arnaz in being the ricardos