# HELP! Catch up clause/clawback?

Can someone please do a full walk through of this question. I literally can never understand how to go about these or even think about them from a bigger perspective.

United Capital is a hedge fund with $250 million of initial capital. United charges a 2% management fee based on assets under management at year end and a 20% incentive fee based on returns in excess of an 8% hurdle rate. In its first year, United appreciates 16%. Assume management fees are calculated using end-of-period valuation. The investor’s net return assuming the performance fee is calculated net of the management fee is closest to: (2020 Q26) **answer is B Management fee: 2\% × \$250\ million × 1.16 = \$5.8\ million Rate of return after management fee: \dfrac{\$250\ million × 1.16 - \$5.8\ million}{\$250\ million} - 1 = 13.68\%

Incentive fee:

20\% × \left(13.68\% - 8\%\right) = 1.136\%

Net return:

13.68\% - 1.136\% = 12.544\%

Thank you.

My pleasure.