Setting up & Charging Fund Management Fees

Updated 6 months ago by Sanjay Vora

Avestor currently allows fund managers to charge investors fees for managing their accounts. The following article provides step by step instructions on how the process works.

Note: fees are charged at an account level on the full account value.

Overview

Avestor provides you the ability to set fund management fees at an investor level. The default fee is set at 0% so fund managers must proactively set up the fees for each investor they onboard. The system calculates fees based on the daily account value. The fees can then be charged on a monthly basis to investor accounts. Fund managers have the flexibility to delay charging the monthly fees into the future for a given investor if the investor does not have a cash balance available to pay the fee. If you charge a fee with no available cash balance, the investor's cash balance will show negative and will automatically correct when the distributions come in to offset the negative cash balance.

Process to charge fees

The following are the high level steps to charge fees. The help videos on each page will provide additional instructions.

  1. Set up fees: Set up the management fee for each investor after they onboard. The start date of the fee must be after the first capital has been received.
  2. Run DAV: After the month is completed, the daily account values must be run for the previous month. Run the DAV process only after all earnings, capital in, capital out and any other transactions have been processed for the month.
  3. Charge fees: After the DAV is calculated for the previous month, the fund manager can then charge the fees to the investor accounts. The time stamp date for the fee transaction must be after the last day of the month.

Example

  1. Betsy joins the fund on April 15th depositing $100,000. The fund manager sets her fee to start on May 1st at 2%.
  2. On June 5th, the fund manager has completed processing all earnings for the month of May. Betsy received 1 distribution for $500 on May 25th.
  3. The fund manager now runs DAV for the month of May. The system will log a daily account value of $100,000 for the days of May 1 through May 24th and a daily account value of $100,500 for May 25th through May 31st.
  4. The fund manager then charges the management fees to the account on June 15th for the month of May. The manager sets the time stamp date as June 1st. They system will calculate the daily fee for each month of May, add it together and then charge the investor the management fee to their account on June 1st.

The above example provides a simple overview of how system works. Please reach out for further assistance.


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