Performance Fees

Annual management fee: 1%

Daily accrual: 1% / 365 = 0.00274%

On $1,000,000 AUM:
  Daily: $27.40
  Monthly: ~$833
  Annual: $10,000

Performance fee: 20%
Hurdle rate: 5%

Vault returns 12% annually on $1,000,000:
  Gross profit: $120,000
  Above hurdle: $120,000 - $50,000 = $70,000
  Performance fee: $70,000 × 20% = $14,000

Quarter 1:
  Starting NAV: $1.00
  Ending NAV: $1.10
  Profit: 10%
  Performance fee charged: Yes (above hurdle)

Quarter 2:
  Starting NAV: $1.10
  Ending NAV: $1.05
  Profit: -4.5%
  Performance fee: No (NAV dropped)

Quarter 3:
  Starting NAV: $1.05
  Ending NAV: $1.12
  Profit: 6.7% from Q2, but only 1.8% from ATH
  Performance fee: Only on $1.10 → $1.12 gain

Vault: $1,000,000 AUM
Management fee: 1%
Performance fee: 20% above 5% hurdle
Period: 1 year
Performance: 12%

Step 1: Management Fee
  $1,000,000 × 1% = $10,000

Step 2: Gross Performance
  Starting: $1,000,000
  Before fees: $1,120,000 (12% return)
  After management: $1,110,000

Step 3: Hurdle Calculation
  Hurdle (5%): $50,000
  Excess return: $110,000 - $50,000 = $60,000

Step 4: Performance Fee
  $60,000 × 20% = $12,000

Step 5: Total Fees
  Management: $10,000
  Performance: $12,000
  Total: $22,000

Step 6: Net to Depositors
  $1,120,000 - $22,000 = $1,098,000
  Net return: 9.8%