Hedge Fund Terms – I

Incentive Fee – The fee for new profits earned by the fund during a specific period. For example, if the initial investment was $1,000,000 and the fund returned 25% during the period (creating profits of $250,000) and the fund has an incentive fee of 20%, then the fund receives 20% of the $250,000 in profits, or $50,000.

Inception Date – The date that the fund started to actively trade.

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