Does the 1x hurdle still protect investors once the portfolio leaks?

Compare what certificate holders receive under the current waterfall in admin mode (hurdle first, then the current split, on a portfolio that loses value over the holding period) against the proposed no-hurdle split with active management on the full proceeds. Everything is per €1 paid in.

Proposed: active, no hurdle Current: admin mode with selected leakage Current, no leakage (reference)
Investor proceeds per €1 paid in, against the gross multiple active management would realise. Where the green line is above the brown one, the proposed deal pays investors more.
Break-even gross multiple for every leakage level 0–75%. Above the line the proposed deal is better for investors; below it the current waterfall is better. Where the line drops to the axis, the proposed deal is never worse.

Admin mode: r·M is distributed, investors take all of it up to the hurdle H, then sold of the rest. Proposed: snew·M. With r = 1 − leakage, the break-even above the hurdle is M* = H·(1 − sold) / (snew − r·sold); if snew ≥ r the proposed deal is at least as good at every multiple.