This example describes the expected workflow of a performance fee that has a rule type of Current Period Variable Expense.
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This example shows many sample values as percentages. You often enter percentages into the Eagle system using a decimal format. |
Step 1. Set Up Performance Fee Rule
You set up a performance fee rule, including bounds, rates, min/max rate restrictions, fee approval option, and benchmark.
The performance fee rule uses the information shown in the following table.
Benchmark Rate Adjustment | Null |
Return Difference Min | 0% |
Return Difference Max | 0% |
Fee Increment | 0.45% |
Minimum Fee Rate | 0.80% |
Maximum Fee Rate | -0.80% |
Benchmark | S&P 500 |
Benchmark Rate Adjustment | Null |
Return Difference Increment | Null |
NAV Comparison Period | Null |
Fee Approval | Autoapprove |
Step 2. Set Up Performance Fee Expense
You set up a performance fee to accrue a variable expense using the Create Performance Fee Expense panel. At the time of the fee setup, the return data is most likely not available. You create the fee rule in an active status with a fee amount of 0. The
The performance fee expense uses the information shown in the following table.
| Expense Account Name | Performance Fees |
| Fee Rule Type | Current Period Variable Expense |
| Fee Type | Variable |
| Accrual Begin Date | July 1 |
| Accrual End Date | July 31 |
| Fee Amount | $0.00 |
| Status | Active |
| NAV Component | Average Net AssetsRolling Avg Net Asset Calculation |
| NAV Switch | Estimates |
| NAV Frequency | 1 Year |
| Accrual Calculation Frequency | Daily |
| Accrual Update Option | Accrual Carry Forward |
| Accrual Calculation Method | Monthly |
| Calendar/Business Days | Calendar |
| True Up Spreading Method | 1 Day |
...
Effective Date | July 1 |
Adjusted Return Difference | 5.19% |
Final Fee Rate | 0.0235% |
ANA | 140,256,983.23 |
ANA Date | June 30 |
Days In Year | 365.00 |
Days In Prior Month | 30.00 |
Daily Fee | 89.74 |
Step 6.
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July Fee Completes and System Adds August
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Fee Rules
During the accrual posting on July 31, the system updates the July fee rule to a Completed status. Additionally, as a result of the performance fee settings that follow, the system adds two new performance fee rules automatically for the month of August.
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| August True-Up Fee Rule Created | |
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| Expense Account Name | Performance Fees |
| Fee Rule Type | Performance Current Period Variable |
| Fee Type | Budgeted |
| Activity Type | True-up |
| Accrual Begin Date | August 1 |
| Accrual End Date | August 1 |
| Fee Amount | $0.00 |
| Status | Pending |
| Accrual Calculation Frequency | Daily |
| Accrual Update Option | None |
| Accrual Reset Frequency | None |
| Calendar/Business Days | Calendar |
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WRITERS NOTE: please explain exactly what is a fee rule and what in system creates it? These examples have fee rules with a fee type of Budgeted and Variable? Does Accrual Process create fee rule records? Where do you view them? Do we need to provide more info about what occurs when you run expense accruals and records and record statuses?
We haven't documented Prospective and it's mentioned here. Where is that found?
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You run the Performance Fee Activity Calculation event, using the Calculate Performance Fee Activity panel. This determines the true-up amount for the July fee, because now the July fee can use the final performance figures from July 31 to calculate the total July performance fee. The system updates the True Up pending row for the current period fee to Active. The system also stores the fee amount for the budgeted true-up expense into the fee log.
Step 9. Run Expense Accruals
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The system will post another performance fee for the July true up amount. It calculates the true-up amount as part of the Performance Fee Activity calculation (Step 10). The system saves the fee amount of -$55.00 to the performance fee true-up rule. The process calculated the actual July fee amount to be $2,300.00. But it estimated the May fee rule at $2,245.00. The system will absorb the difference of $55.00 on the 1st day of August. The rule is Active and the system will post and close it as part of the Trigger Fee event
| Expense Account Name | Performance Fees |
| Fee Rule Type | Performance Current Period Variable |
| Fee Type | Budgeted |
| Activity Type | True-up |
| Accrual Begin Date | August 1 |
| Accrual End Date | August 1 |
| Fee Amount | $55.00 |
| Status | Closed (The status switches to Closed after you process the Trigger Fee event on August 1) |