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What is a hurdle rate?
Asked by Dan Constantine






Answer By Julie Scuderi

The minimum return necessary for a hedge fund manager to start collecting incentive fees. The hurdle is usually tied to a benchmark rate such as Libor or the one-year Treasury bill rate plus a spread. If, for example, the manager sets a hurdle rate equal to 5%, and the fund returns 15%, incentive fees would only apply to the 10% above the hurdle rate.



Answer By owen shuler

baseline rate of return assured an lp within the fund