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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.
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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.
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| 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 Assets |
| 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 |
Step 3. Accrue Expenses
At start of day on July 1, the Trigger Expense Accrual job is executed using the Start of Day Global Automated Event Wrapper event group. You have not yet input the fund and benchmark return data into Eagle Accounting. As a result, the the system does not run the performance fee because it is missing the return data.
Step 4. Input Returns for June 30
In the middle of the day on July 1, you input the June 30 return numbers into Eagle Accounting using the event associated with the Create Performance and Benchmark Data panel.
Benchmark Name | S&P 500 |
Effective Date | June 30 |
Fund Return | 10.84% |
Benchmark Return | 5.65% |
Step 5. Accrue Expenses
You run the Trigger Fee event to process expense accruals. The system posts the daily fee amount of 89.74 to accounting.
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. July Fee Completes and System Adds August 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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| July True-Up Fee Rule Created to Apply in August | |
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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 |
Step 7.
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Input Returns for July 31
In the middle of the day on August 1, you input the July 31 return numbers into Eagle Accounting using the Create Performance and Benchmark Data panel associated event.
Benchmark Name | S&P 500 |
Effective Date | July 31 |
Fund Return | 15.84% |
Benchmark Return | 7.24% |
Step 8. Calculate Performance Fee Activity
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
You run the Trigger Fee event to run expense accruals. The system posts the daily fee amount of 151.09 to accounting.
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