Managers have two main fee options, which you can set when creating a strategy: Performance Fee and Management Fee. These fees are expressed as percentages, allowing flexibility based on the manager’s preferences for their strategy. Here’s a closer look at each option:
1. Performance Fee
- Definition: This is a percentage of the profit generated during the specified period.
- Limit: Can be set at up to 50% of the profit for the period.
- High Water Mark: The performance fee is subject to a high water mark, which means the manager only earns the fee if the strategy’s value exceeds its previous peak.
2. Management Fee
- Definition: A percentage charged on the balance under management, regardless of performance.
- Limit: Can be set up to 20% of the managed balance.
- Frequency: The management fee can be charged monthly or annually.
- Withdrawal Deduction: The management fee is also deducted from any partial withdrawals made by investors from their requested withdrawal amount.
Important Considerations
- Fixed at Creation: Managers set both fees only once, during the strategy creation process.
- Non-Adjustable: Once established, the manager cannot modify the fee levels. These initial settings remain fixed throughout the strategy’s lifecycle.
These options are designed to balance manager earnings with investor protection, ensuring transparency and fairness in fee structures.