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:
“There is something singularly grand and impressive in the sound of a tree falling in a perfectly calm night like this, as if the agencies which overthrow it did not need to be excited, but worked with a subtle, deliberate, and conscious force, like a boa-constrictor, and more effectively then than even in a windy day.”
—Henry David Thoreau (1817–1862)
“... often in the heat of noonday, leaning on a hoe, looking across valleys at the mountains, so blue, so close, my only conscious thought was, “How can I ever get away from here? How can I get to where they have books, where I can be educated?” I worked hard, always waiting for something to happen to change things. There came a time when I knew I must make them happen; that no one would do anything about it for me. And I did.”
—Belinda Jelliffe (1892–1979)