High-water Mark

  • caoli,
    You have to ask a question before we can help you.
    What do you want to know about "High-water Mark"?
    The context is very important with this phrase. It can be literal or figurative, depending on its setting. Can you give us any more information?

    In general, it refers to the highest point that water reaches during a flood or tide. As you can see, the context can make a dramatic shift in how it's interpreted.
    Its a financial term. Can't find it in regular dictionaries.
    A provision serving to ensure that a fund manager only collects incentive fees on the highest net asset value previously attained at the end of any prior fiscal year -- or gains representing actual profits for each investor.
    Ah! Thanks for the context.

    If you think of it as a mark made at the highest net asset value in prior years it makes sense.

    A high-water mark is a new record high in some area or other. Here they are using it to indicate the record high point in the value of the fund in a previous year. Apparently, the fund fluctuates in net asset value over the course of the year. The "High-Water Mark" would be the highest value it attained at any point in the year.

    On the following link there is a picture of a "high water marker" being installed on a telephone pole after a flood. These are quite common in the U.S. after major floods. (It's the fourth picture down, I believe).


    Here's another photo that might portray it better:

    That description seems to imply that if stock X ended last year at a price of 400, then this fund manager will only collect any available incentives if the stock rises above that 400 in this year. 400 is the high-water mark.

    The phrase derives from sea-levels - as you look at a stony beach you will notice different water-levels.
    The first is, if the tide is at its lowest possible level, the low-water mark;
    the second is the highest recent water mark - this is where the damp flotsam and jetsam is tangled up in the loose seaweed.
    The third will be the high-water mark - this will be the highest level at which there is any sign of seaweed growing and possibly signs of drifting detritus, usually very dry flotsam and jetsam, sun-bleached from lying there a long time since the last very high tide.
    There is also a geographical high-water mark which marks on maps the highest tide ever recorded.

    This is what the financial concept refers to. The fund manager is under an incentive to get rid of any fund which looks like it might be going downwards as there is no benefit in staying with a share which loses even one point off the high-water mark of the last year.