High-Water Mark

Filed Under » ,
Dictionary Says

Definition of 'High-Water Mark'

The highest peak in value that an investment fund/account has reached. This term is often used in the context of fund manager compensation, which is performance based.
Investopedia Says

Investopedia explains 'High-Water Mark'

The high-water mark ensures that the manager does not get paid large sums for poor performance. So if the manager loses money over a period, he or she must get the fund above the high watermark before receiving a performance bonus. For example, say after reaching its peak a fund loses $100,000 in year one, and then makes $250,000 in year two. The manager therefore not only reached the high-water mark but exceeded it by $150,000 ($250,000 - $100,000), which is the amount on which the manager gets paid the bonus.

Articles Of Interest

  1. Are Equity-Indexed Annuities Right For You?

    Equity-indexed annuities can be confusing to understand, but for conservative investors, they can be valuable savings plans.
  2. Should You Follow Your Fund Manager?

    Learn how to tell if a fund in flux is still a suitable investment.
  3. Mutual Fund Basics Tutorial

    Learn about the basics - and the pitfalls - of investing in mutual funds.
  4. How To Cut Your Mutual Fund Fees By Up To 90%

    Most mutual funds don’t come close to beating the indexes they’re compared against. And yet they carry steep fees for active management. Find out how a little research and effort can cut your ...
  5. Beware Of The Mutual Fund Performance Trap

    Want to own a mutual fund that will double its reported return in the next six months? Chances are, you already do. Every equity mutual fund on the planet is about to report a big jump in ...
  6. The Copper King: An Empire Built On Manipulation

    Find out how Yasuo Hamanaka's actions in the copper market forever changed the rules for commodity traders.
  7. Get An Academic Finance Career

    Working nine months a year and earning a six-digit salary might seem like the high life, but these jobs are not easy to come by.
  8. Uncommon Jobs For Your Finance Degree

    Not everyone can land the glamour jobs, but the world of finance has a lot more to offer. Here are some uncommon jobs in finance that you might want to consider.
  9. Learn The Lingo Of Private Equity Investing

    Because of the non-public nature of private equity, it can be difficult to the learn the lingo. We break it down here.
  10. Using ETFs To Replace Your Expensive Mutual Funds

    Fees associated with many mutual funds looks small. Some are barely over 1% or even lower. But over time those fees erode the overall value of your portfolio. And even in the near term, as in ...
comments powered by Disqus
Marketplace
Hot Definitions
  1. Racketeering

    Racketeering refers to criminal activity that is performed to benefit an organization such as a crime syndicate. Examples of racketeering activity include...
  2. Lawful Money

    Any form of currency issued by the United States Treasury and not the Federal Reserve System, including gold and silver coins, Treasury notes, and Treasury bonds. Lawful money stands in contrast to fiat money, to which the government assigns value although it has no intrinsic value of its own and is not backed by reserves.
  3. Fast Market Rule

    A rule in the United Kingdom that permits market makers to trade outside quoted ranges, when an exchange determines that market movements are so sharp that quotes cannot be kept current.
  4. Absorption Rate

    The rate at which available homes are sold in a specific real estate market during a given time period.
  5. Yellow Sheets

    A United States bulletin that provides updated bid and ask prices as well as other information on over-the-counter (OTC) corporate bonds...
  6. Bailment

    The contractual transfer of possession of assets or property for a specific objective.
Trading Center