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I understand that "High Water Mark" is the highest NAV value that the Hedge Fund has ever reached, and therefore, the threshold NAV value of the Hedge Fund in question needed in order for the Hedge Fund Manager to start collecting Incentive Fees(Performance Fees).

Thus, there is a relatively clear method involved when trying to determine the "High Water Mark" of a Hedge Fund.

The "Hurdle Rate" is the Hedge Fund's threshold annual rate of the return needed in order for the Hedge Fund Manager to start collecting Incentive Fees(Performance Fees).

How is the "Hurdle Rate" of the Hedge Fund determined? Is there a relative clear method involved to determine the "Hurdle Rate" of the Hedge Fund?

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The Hurdle Rate isn't a strictly defined value. Each fund will have a different formula for what the rate means to them. Maybe it's x% over the S&P 500 or it could be 90% of the 5y moving average of the fund. If you look at the prospectus of a given fund, they may explain the derivation of the value. Often it may be considered proprietary information and you just need to treat it as a static value.

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