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 |
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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 |
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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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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 1 |
| Fee Amount | -$566.08 |
| Status | Active |
Step 13. Accrue Expenses
The You execute the Trigger Expense Accrual job is executed again, either by you manually, or as part of the transaction close schedule.
The performance fee posts $1,434.89 for June 1. This number is calculated by dividing $43,046.73 by 30 days in June.
The system also post posts -$566.08 on June 1 for the true-up adjustments, because you elected to make a one-time posting on June 1.
At start of day on each subsequent day in June, the Trigger Expense Accrual job posts a performance fee of $1,434.89 on each day, with the last day in June posting the exact amount needed to reach $43,046.73.
This process continue continues indefinitely for subsequent months until you modify the Accrual Update Option on the latest fee rule to Manual, or you close the fee manually through the close panel.