A high-water mark is the highest peak in value that an investment fund or account has reached. This term is often used in the context of fund manager compensation, which is performance-based. The high-water mark ensures the manager does not get paid large sums for poor performance. If the manager loses money over a period, he must get the fund above the high-water mark before receiving a performance bonus from the assets under management (AUM).

(Source: Investopedia)

HEYBIT charges "performance fee" and until you terminate the contract, high-water mark is applied, meaning a "water mark" is set for every contract period (180 days) and we charge the fee based on the "excess profit" from the previous water mark or the highest performance point.

Here's an example.

Let's say the performance of HEYBIT's FF strategy has changed 100 (starting point) -> 120 -> 110 -> 80 -> 140 for each 180-day term.

For the first term, there is the + performance of 20. The performance of the next term is 110. Since it's 10 below the previous term, the performance fee WILL NOT be charged. Also, when it goes down to 80, there WILL NOT be any fee charged.

When it goes up to 140, the high-water mark (the previous highest point) is 120 so the performance fee will be charged only for that excess profit of 20. From this point on, the fee will be charged only, when the next term's performance exceeds the new high-water mark of 140, for that specific excess.

Keep in mind that this high-water mark exists when the contract is maintained. If it's terminated, then the mark also disappears and is reset. Once you renew the contract, the new mark will be applied.

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