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The high watermark clause is applied in connection with success-dependent fees (performance fees). The asset manager calculates his fee on the basis of the increase in value compared to the last peak. This means that the performance fee only becomes due once any losses have been made up in full. Example: If a client invests CHF 100,000 and only has CHF 90,000 at the end of the year, no fee will be charged. If the portfolio increases to CHF 95,000 in the following year, no fee may yet be charged. Only when the portfolio increases for example to CHF 110,000 may the asset manager charge a performance fee for the amount exceeding the original CHF 100,000, i.e. in this case CHF 10,000.

Term-Nr.: 430

German: High Watermark (415)

Source: SFO D15 2010 m. e. E., 24.04.2010

Notice: The contents of this terminology collection Lawpedia® with a focus on business law (especially financial market law) have been researched with great care and compiled on the basis of an extensive flash card, training materials and literature. The various sources (as far as they could be found) can be found in the abbreviations and source references. References to other sources are welcome. Despite the care taken, the provider cannot accept any liability for the accuracy, completeness and topicality of the information provided. The information is of a general nature in particular and does not constitute legal advice in individual cases.

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