What’s the performance fee? - Tradesocio

Performance fee is the fee to be paid only if there’s a positive performance from the fund, and it’s based on the HWM (High Water Mark) calculations which means only the new accumulated positive performance is charged with the performance fees.Example: Assume that you invested in a fund in which the performance fees where 25%, then let’s see the fees every month with the following scenario: Month(1): if the performance is +1,500 USD, then the performance fees for that month will be 375 USD and the HWM (High water mark) will be 1,500 USD. Month(2): if the performance is +750 USD, then the overall accumulated profit is 1,875 USD and the new HWM is 1,875 USD, and the fees for that month will be (1,875 (the new HWM) – 1,500 ( the old HWM) ) * 25% = 93.75 USD Month(3): if the performance is -800 USD, the HWM stays at 1,875 USD because no additional profits were added, but the accumulated profits will be 1,075 USD. Month(4): if the performance is +500 USD, the accumulated profits will be 1,575 USD but as this amount is still below the previous HWM which is 1,875 USD then there’re no fees will be deducted that month.