“The Performance fee is based on a high watermark model.” Why | ALGO Trading

“The Performance fee is based on a high watermark model.” Why it is so important for the investor?

Let us first learn what means “a high watermark model” when applied to the performance fee paid by investor for the trading account management. The high-water mark ensures the manager does not get paid large sums for poor performance. If the manager loses money over a period, he must get the fund above the high-water mark before receiving a performance bonus from the assets under management.