Which provision of a hedge fund’s incentive fees is designed to prevent investors from paying multiple incentive fees for the same performance?

If a hedge fund has a high water mark, incentive fees are based on increases in investors’ accounts above their highest previous values. As a result, fund managers do not receive incentive fees on returns that reverse previous losses. A hurdle rate is a minimum return a fund must achieve in a given period before fund managers receive incentive fees. A 2-and-20 structure means fund managers receive a 2% management fee and a 20% incentive fee; other provisions determine the base amounts on which these fees are calculated.