Nine out of 10 long/short hedge funds fall below their watermark

More than 90% of long/short portfolios covered by CSFB/Tremont were sitting below their watermarks towards the end of 2002.

Low and volatile returns over the past year have left hedge fund managers across most strategies trying to maintain clients under increasingly tight margins.

As most hedge funds impose high watermarks to their 20% performance fees, they cannot collect these charges from investors until they have made good previous shortfalls.

This has led to a rise in the annual managemen