Struggling with performance fees in a low-return market

High watermarks for performance fees renegotiated on an annual basis will be an increasing trend over the next two years, as struggling managers seek to maximise their own and their company's operating income.

European managers are starting to adopt, albeit in small numbers, a practice started in the US allowing adjustable high watermarks, or levels which are negotiable on an annual basis.

As reported in Hedge Funds Review last month, large numbers of managers are trading below their high waterm