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Options
-
High watermark principle means charging fees based on the performance of the Portfolio Manager only when the AUM crosses the previous high value
Correct answer
- B
The high watermark principle is a fixed threshold of AUM below which performance-based fees are not paid
- C
High watermark principle is the threshold rate that can be charged as a performance-based fee
- D
Watermark principle is a fixed premium appreciation of the assets after which the performance-based fees are charged
Why this is the answer
The high watermark ensures that performance fees are paid only on gains exceeding the highest previous AUM, preventing double charging.
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