Worked Example
An example might be as follows: An investor subscribes for shares worth $1,000,000 in a hedge fund. Over the next year the NAV of the fund increases by 10%, making the investor's shares worth $1,100,000. Of the $100,000 increase, 20% (i.e. $20,000) will be paid to the investment manager, thereby reducing the NAV of the fund by that amount and leaving the investor with shares worth $1,080,000, giving a return of 8% before deduction of any other fees.
Read more about this topic: Performance Fee
Famous quotes containing the word worked:
“Let a man learn to look for the permanent in the mutable and fleeting; let him learn to bear the disappearance of things he was wont to reverence; without losing his reverence; let him learn that he is here, not to work, but to be worked upon; and that, though abyss open under abyss, and opinion displace opinion, all are at last contained in the Eternal Cause.”
—Ralph Waldo Emerson (1803–1882)
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—Calvin Trillin (20th century)