High Water-Mark (HWM) / Loss Carry-forward

This represents the peak net asset value that an investor’s holding in an investment fund has reached. A high-water mark is used to help determine the amount of performance-based compensation that a manager can earn; if the net asset value of the fund falls in one investment period (typically annual), the manager can only begin to charge a performance fee again once the investment has recouped those losses and the net asset value has exceeded the high water mark.