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The following example assumes an account with performance
fees of 20%. For our current promotions, please click here.
The performance fees are taken on a high watermark basis.
A high watermark is the previous high in the participant's
account (adjusted for deposit and withdrawals). It ensures that
the fees only get deducted based on new performance, rather than
just recovery of poor performance. In other words, if an account
loses money over a period, the account must first recoup previous
losses and then any profit above the high watermark is subject
to a performance fee.
As an example:
- The account starts with $5,000 initially.
- At the end of the first month, it makes $300 bringing
the equity to $5,300, on which the performance fee of 20%, or $60,
is deducted.
- Then, at the end of the second month, it loses $400
bringing the equity to $4,900, on which no performance fees are charged.
- At the end of the third month, it makes $200 bringing
the equity up to $5,100, on which no performance fees are charged
since the previous watermark was not reached.
- Lastly, at the end of the fourth month, the account makes $300,
bringing the equity to $5,400, which is a new equity high by
$100 over the watermark of $5,300 in the first month, on which the performance
fee of 20%, or $20, is deducted.
The performance fees are thus influenced by the exact date when the account opens.
Hence, participants who enter into the accounts
on different dates will have different watermarks. Watermarks
are based on the actual returns and date of entry for each account,
thereby resulting in different watermarks for different accounts. Since
account returns will vary based on the open date,
the performance fees are calculated seperately for each account.
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