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:
“I do not want to be covetous, but I think I speak the minds of many a wife and mother when I say I would willingly work as hard as possible all day and all night, if I might be sure of a small profit, but have worked hard for twenty-five years and have never known what it was to receive a financial compensation and to have what was really my own.”
—Emma Watrous, U.S. inventor. As quoted in Feminine Ingenuity, ch. 8, by Anne L. MacDonald (1992)
“We thus worked our way up this river, gradually adjusting our thoughts to novelties, beholding from its placid bosom a new nature and new works of men, and, as it were with increasing confidence, finding nature still habitable, genial, and propitious to us; not following any beaten path, but the windings of the river, as ever the nearest way for us. Fortunately, we had no business in this country.”
—Henry David Thoreau (1817–1862)