This example describes the expected workflow of a performance fee that has a rule type of Prior Period Budgeted Estimated Expense. It shows a monthly prior period estimated performance fee.
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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 reference performance rule, including bounds, rates, min/max rate restrictions, and benchmark.
The performance fee rule uses the information shown in the following table. Notice that the performance fee requires approval prior to posting.
Benchmark Rate Adjustment | Null |
Return Difference Min | Null |
Return Difference Max | Null |
Fee Increment | 35.00% |
Minimum Fee Rate | 0.70% |
Maximum Fee Rate | -0.70% |
Benchmark | US 30 Year Treasury Bill |
Benchmark Rate Adjustment | 0.10% |
Return Difference Increment | Null |
NAV Comparison Period | Monthly |
Fee Approval | Manual |
Step 2. Set Up Performance Fee
You create a fee rule to accrue an estimated budgeted expense for performance fees using the Create Performance Fee Expense panel. At the time of the fee rule setup, the return data is most likely not available. You create the fee rule in a pending status with a fee amount of 0. You also choose a Trueup Spreading Method of Monthly. This indicates that by default, the system adds a true-up rule in the following month (June) to adjust the amount posted in May.
The performance fee expense uses the information shown in the following table.
Expense Account Name | Performance Fees |
Fee Rule Type | Performance Prior Period Estimate |
Fee Type | Budgeted |
Activity Type | Prospective |
Accrual Begin Date | May 1 |
Accrual End Date | May 31 |
Fee Amount | $0.00 |
Status | Pending |
NAV Component | Average Net Assets |
NAV Switch | Rolling Prior Period |
NAV Frequency | 1 Year |
Accrual Calculation Frequency | Daily |
Accrual Update Option | Accrual Carry Forward |
Accrual Reset Frequency | Monthly |
True-up Spreading Method | Monthly |
Calendar/Business Days | Calendar |
Step 3. Accrue Expenses
At start of day on May, you execute the Trigger Expense Accrual job using a scheduled event. You have not yet input the fund and benchmark return data into the accounting system. As a result, the system does not run the performance fee because it is still in Pending status.
Step 4. Input Returns for April 30
In the middle of the day on May 1, you input the April 30 return numbers into the accounting system using the event associated with the Create Performance and Benchmark Data panel.
Benchmark Name | US 30 Year Treasury Bill |
Effective Date | June 30 |
Fund Return | 0.8965% |
Benchmark Return | 0.0490% |
Step 5. Calculate Performance Fee Activity
You run the Performance Fee Activity Calculation event associated with the Calculate Performance Fee Activity panel. The event calculates the data in the following table, including fee rates, average net assets, and the fee amount for May.
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Expense Account Name | Performance Fees |
Accrual Begin Date | May 1 |
Accrual End Date | May 31 |
Fee Amount | $41,092.05 |
Status | Pending |
Step 6 Approve Performance Fee
You run the Performance Fee Approval event using the Approve Performance Fee panel. The panel runs the Performance Fee Activity Calculation Query, returning the May fee rule and its associated calculation output data. You must then approve the rule by submitting the performance fee approval event, which changes the rule from Pending status to Active status. You also have the opportunity to change the performance fee rate and performance fee end date on the performance fee rule if you want to adjust the calculated amount.
Expense Account Name | Performance Fees |
Accrual Begin Date | May 1 |
Accrual End Date | May 31 |
Fee Amount | $41,092.05 |
Status | Active |
Step 7. Accrue Expenses
You execute the Trigger Expense Accrual job again manually. The performance fee posts $1,325.55 for May 1. This number is calculated by dividing $41,092.05 by 31 days in May.
At start of day global processing on each subsequent day in May, the Trigger Expense Accrual job posts a performance fee of $1,325.55 each day, with the last day in May posting the exact amount needed to reach $41,092.05.
Step 8. May Fee Completes and System Adds June Fee Rules
During the accrual posting on May 31, the system updates the May fee rule to a Completed status. Additionally, due to the performance fee rule settings that follow, the system automatically adds two new performance fee rules for the month of June.
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May True-Up Fee Rule Created to Apply in June | |
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Expense Account Name | Performance Fees |
Fee Rule Type | Performance Prior Period Estimate |
Fee Type | Budgeted |
Activity Type | True-up |
Accrual Begin Date | June 1 |
Accrual End Date | June 30 |
Fee Amount | $0.00 |
Status | Pending |
Accrual Calculation Frequency | Daily |
Accrual Update Option | None |
Accrual Reset Frequency | None |
Calendar/Business Days | Calendar |
Step 9. Accrue Expenses
At start of day on June 1, the Trigger Expense Accrual job is executed via Start of Day Global Processing. You have not yet input the fund and benchmark return data into Eagle Accounting. As a result, the system does not run the performance fee because both rules are still in Pending status.
Step 10. Input Returns for May 31
In the middle of the day on June 1, you input the May 31 return numbers into Eagle Accounting using the event associated with the Create Performance and Benchmark Data panel.
Benchmark Name | US 30 Year Treasury Bill |
Effective Date | May 31 |
Fund Return | 0.9165% |
Benchmark Return | 0.0590% |
Step 11. Calculate Performance Fee Activity
You run the Performance Fee Activity Calculation event, using the Calculate Performance Fee Activity panel. The event calculates the following data, including fee rates, average net assets, and the fee amount for June.
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Expense Account Name | Performance Fees |
Fee Rule Type | Performance Prior Period Estimate |
Fee Type | Budgeted |
Activity Type | True-up |
Accrual Begin Date | June 1 |
Accrual End Date | June 30 |
Fee Amount | $566.08 |
Status | Pending |
Step 12. Approve Performance Fees
You run the Performance Fee Approval event using the Approve Performance Fee panel. The panel runs the Performance Fee Activity Calculation Query, returning the June fee rules and the associated calculation output data. You must then approve the rule by submitting the performance fee approval event that changes the rules from Pending status to Active status.
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Expense Account Name | Performance Fees |
Fee Rule Type | Performance Prior Period Estimate |
Fee Type | Budgeted |
Activity Type | True-up |
Accrual Begin Date | June 1 |
Accrual End Date | June 1 |
Fee Amount | -$566.08 |
Status | Active |
Step 13. Accrue Expenses
The Trigger Expense Accrual job is executed again, either by you manually, or as part of the transaction close schedule.
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