#21 High Watermark 

'HIGH WATERMARK - Last highest net asset value that ...Fund or ...Account Must exceed in order... to be entitled to Performance-Based Fee. ' Click to Tweet

Full Definition

This term is defined in the GIPS 2020 Exposure Draft as “Last highest net asset value that a POOLED FUND or SEGREGATED ACCOUNT MUST exceed in order for the investment manager to be entitled to a PERFORMANCE-BASED FEE.

Key Points about This Term

  1. This term is new in the Global Investment Performance Standards (GIPS) vocabulary.
  2. Not a new term or practice within the investment management industry though, particularly by private equity managers.
  3. Fun Fact – It appears two (2) times in the Exposure Draft, including its appearance in the glossary of terms.
  4. Possible Evolution under new Standards – Here to stay as part of the new Standards.