Performance Fees

Duration: 1 Day

Programme overview

A review of performance fee calculation methodology, accounting and challenges.

Course Objectives

At the end of this course participants will be able to

  • Describe what is meant by Gross Asset Value and calculate a basic performance fee.
  • Calculate a performance fee in a period after a fee has crystallized and calculate a performance fee incorporating a hurdle rate.
  • Discuss why the correct accounting and allocation of performance fees amongst investors is important.
  • Calculate and allocate performance fees using the Series of Shares method.
  • Calculate equalization credits and convert an equalization credit balance to shares.
  • Calculate an additional performance fee*; and convert an additional performance fee to a redemption of shares.
  • Describe how equalization credit and additional performance fee balances can change over time; and describe what happens upon redemption under the equalization credit method.

*also known as equalization debit, contingent redemption or contingent liability.

Who should attend?

  • Fund accountants, trustees, auditors.
  • Investor services teams will also benefit.

Course Content (Summary)

  • Introduction to performance fees
  • High water marks
  • Hurdles
  • What’s the problem with performance fees
  • Equalization credits
  • Additional performance fees
  • Accounting for performance fees
  • More challenges
  • Other methods – series of shares

Trainer Profile