The performance fee is paid to Portfolio Managers (PM) or Strategy Providers (SP) at the end of the billing period. This fee is calculated as a percentage of the incremental profit, which is the difference between the investment profit and the profit threshold. Below is a detailed explanation of how these terms are defined and how the performance fee is calculated.
Calculation Formula: Performance fee = Incremental profit * fee rate
Incremental Profit: Incremental profit is the difference between the profit since inception and the profit threshold, indicating the growth in profit during the billing period compared to the previous peak.
Incremental profit = Profit since inception – Profit threshold
- Profit since inception: The sum of trading results for both closed and open investment orders from the start of the investment until the end of the billing period.
- Profit threshold: The highest peak of profit since the start of the investment, reached at the end of one of the previous billing periods. Initially, the profit threshold is zero.
At the end of each billing period, the profit since inception is compared with the previously set profit threshold. If the profit is higher, this new value is set as the profit threshold for future periods. If the profit since inception is lower than the profit threshold, there will be no incremental profit, and no performance fee will be charged.
Example Calculation for reference
| Date | Operation | Amount |
| 1 | Start Follow | 3003 |
| Add Credit | 2000 | |
| Deposit | 400 | |
| Withdraw | -200 | |
| Trade | 500 |
Beginning Balance = 3000
Real Equity = Equity – Credit = 5700 -200 = 3700
Real Profit = Real Equity – Beginning Balance – ( Deposit + Withdraw ) = 3700 -3000 – ( 400 + 200 )
700 – 200 = 500
Profit to Share = Real Profit – High Water Mark ( 0 because of first calculation) = 500 – 0
500 is the High water Mark
Performance fee = Profit to share / Performance fee = 500/10 = 50 ( Performance Fee)
| Date | Operation | Amount |
| 2 | Equity | 5650 ( Equity – Performance fee) |
| | Trade | 500 |
| | Withdraw | -200 |
Beginning Balance = 3000
Real Equity = 5950-200 = 3950
Real Profit = 3950 -300 – ( 400 – 200 – 200 ) + All performance fee = 1000
Profit to share = Real Profit – High Water Mark = 1000 – 500 = 500
Performance fee: 500 / 10 = 50
End of Billing Period Process
At the end of a billing period:
- Orders made by PMs and SPs remain unaffected.
- All orders in investments are closed and reopened at the same price (zero spread).
- The performance fee is calculated.
- This fee is deducted from the investment account.
- The deducted fee is credited to the PIM Commission account for PMs and the ST Commission account for SPs.
- If the PM has Referral Associates linked to their account, the awarded performance fee will be distributed at the end of the billing period.
Early Investment Closure
If the investor decides to stop their investment before the end of the billing period:
- All orders are closed at the current market price.
- The performance fee is calculated.
- This fee is deducted from the investment account.
- The deducted fee is credited to the PIM Commission account for PMs and the ST Commission account for SPs at the end of the billing period.
Details of fees calculated and paid per investment are available in the performance fee report. For further queries regarding commission calculation, please contact our friendly Support Team.
