A provision that ensures performance fees are not earned until the value of a fund exceeds its previous highest level is referred to as which one of the following?
A)unearned income provision
B)low-fee provision
C)water mark
D)high-water mark
E)double-dip provision

Question

Quizplus · Accepted Answer

This provision is commonly known as the high-water mark. It ensures that fund managers only earn performance fees if they generate returns that exceed the previous highest value of the fund. This discourages managers from taking excessive risks or making reckless investments.

A Provision That Ensures Performance Fees Are Not Earned Until