# High-Water Mark - Example The calculation of our **Performance Fees** is based on the High-Water Mark principle. Designed to **protect the interests of investors**, the High-Water Mark method ensures that Performance Fees are not charged multiple times on the same portion of gains. In the following example, to simplify matters, let's assume that: * **Management fees:** 2%. * **Performance fees:** 20%. * **Assets under management:** 100 000€. \***HWM** (High-Water Mark) : Peak net asset value achieved by the portfolio. ## 1st quarter To benefit from the management of their **100 000€**, the investor pays the management fees: 2% \* 100 000€ = **2 000€**. *In the first year, the management fees cannot be paid with the assets under management. For the subsequent years, the choice is left to the investor.* The assets under management at the beginning of Year 1 are 100 000€. By the end of the 1st quarter, the fund has shown positive performance (+20%), resulting in the assets under management rising to **120 000€**. The assets under management are higher than the previous High-Water Mark (100 000€).\ The investor pays the **Performance Fees:** 20% \* (120 000€ - 100 000€) = **4 000€**. The **assets under management** at the end of the 1st quarter amount to: 120 000€ - 4 000€ = 116 000€.\ The **High-Water Mark** is updated and set at **116 000€**. ## 2nd quarter The assets under management at the beginning of the second quarter are 116 000€. By the end of the 2nd quarter, the fund has shown positive performance (+10%), resulting in the assets under management rising to **127 600€**. The assets under management are higher than the previous High-Water Mark (116 000€).\ The investor pays the **Performance Fees**: 20% \* (127 600€ - 116 000€) = **2 320€**. The **assets under management** at the end of the period amount to: 127 600€ - 2 320€ = 125 280€.\ The **High-Water Mark** is updated and set at **125 280€**.
QuarterPerformanceAssetsFeesHWM*
0-100 000€2 000€100 000€
1+20%120 000€4 000€116 000€
2+10%127 600€2 320€125 280€
## 3rd quarter The assets under management at the beginning of the third quarter is **125 280€**. The fund finishes the quarter with a negative performance (-10%). \ The **assets under management** decrease to **112 752€**. The assets under management are lower than the previous High-Water Mark.\ **No performance fees are charged for this period.** The **assets under management** at the end of the this quarter amount to: 112 752€. \ The **High-Water Mark** remains unchanged at **125 280€**. ## 4th quarter The assets under management at the beginning of the fourth quarter are: **112 752€**. By the end of this quarter, the fund has shown positive performance (+20%), resulting in the **assets under management** rising to **135 302,40€**. The assets under management are higher than the previous High-Water Mark (125 280€).\ The investor pays the **Performance Fees**: 20% \* (135 302,40€ - 125 280€) = **2 004,48€**. The **assets under management** at the end of the 1st year amount to: 135 302,40€ - 2 004,48€ = 133 297,92€.\ The **High-Water Mark** is updated and set at **133 297,92€**.
QuarterPerformanceAssetsFeesHWM*
3-10%112 752€-125 280€
4+20%135 302,40€2 004,48€133 297,92€
The subsequent calculations follow the same procedure. --- # Agent Instructions: Querying This Documentation If you need additional information that is not directly available in this page, you can query the documentation dynamically by asking a question. Perform an HTTP GET request on the current page URL with the `ask` query parameter: ``` GET https://docs.cryptotrader.app/en/management-mandate/high-water-mark.md?ask= ``` The question should be specific, self-contained, and written in natural language. The response will contain a direct answer to the question and relevant excerpts and sources from the documentation. Use this mechanism when the answer is not explicitly present in the current page, you need clarification or additional context, or you want to retrieve related documentation sections.