Regarding hedge fund incentive fees, hedge fund managers ______ if the portfolio return is very large and ______ if the portfolio return is negative.

Question

Quizplus · Accepted Answer

Hedge fund managers typically earn an incentive fee based on the fund's performance. If the portfolio return is very large, they get the fee. If the portfolio return is negative, they don't earn an incentive fee but don't lose anything except the opportunity to earn that fee. They do not typically have to refund fees or lose the management fee in such scenarios.

Regarding Hedge Fund Incentive Fees, Hedge Fund Managers ______ If