Hurdle Rate Definition
Hurdle Rate Definition: 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.Definition courtesy of HedgeCo
Additional Outside Hurdle Rate Resources:
- Hedge Fund Management and Performance Fees White Paper
- A Hedge Fund Primer (Includes details on Hurdle Rates)
- Hedge Fund Overview - Includes Hurdle Rate Discussion
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