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:
“Tailor’s work—the finishing of men’s outside garments—was the “trade” learned most frequently by women in [the 1820s and 1830s], and one or more of my older sisters worked at it; I think it must have been at home, for I somehow or somewhere got the idea, while I was a small child, that the chief end of woman was to make clothing for mankind.”
—Lucy Larcom (1824–1893)
“It seems to me that upbringings have themes. The parents set the theme, either explicitly or implicitly, and the children pick it up, sometimes accurately and sometimes not so accurately.... The theme may be “Our family has a distinguished heritage that you must live up to” or “No matter what happens, we are fortunate to be together in this lovely corner of the earth” or “We have worked hard so that you can have the opportunities we didn’t have.””
—Calvin Trillin (20th century)