High water mark reassessed

Managers need to reassess the applicability of the high water mark for hedge fund fees if markets enter a lengthy period of flat returns.

Dan Shapiro, head of the London office of hedge fund lawyers Schulte Roth & Zabel, said smaller equity portfolios may struggle to meet the costs of running a hedge fund business if stock markets remain flat and high water mark for fees are applied.

'The question becomes whether managers can stay in business and keep people on board if the high water mark applies