Manage Recoupments for Special Waivers

Expense recoupments are a way for a fund manager to recover expenses that were previously waived in an effort to lower fees. Many times new funds waive expenses for a period of time, especially when the fund assets are low. The expense recoupment begin to occur after the fund has been established for a period of time or once the assets reach a certain level. Each fund manager may have different rules which determine what the fund allows it to recoup. The fund manager decides what balances are eligible for recoupment and when the recoupment can take place. Some funds recoup in the current year first and then move to prior year balances. Other funds recoup the prior year balances before the current year balances, and some funds only recoup the prior year balances, never touching the current balances until they roll to a prior year balance state.

When you set up recoupments for a special waiver, you can set up several options that affect how the system processes the recoupment. For a description of each option, see Create Special Waiver Panel Options. You can identify use the Prior Year Recoupment Recovery Order option and the Prior Recoupment Years to Target option to determine how the system targets recoupment years and dollars for recoupment. You can define a Recoupment Threshold value that determines when a fund processes recoupments in cases where the gross expenses are below the expense cap limit. The system can also use a Contractual Cap to determine which amount of the reimbursement it can recoup in the future. The system can store recoupment balances for expense waivers. 

When you set up recoupments for entities that process special waivers associated with waterfall waivers, one additional option, Total Fund Recoupment, becomes available. The system only processes Total Fund Recoupment when all share classes within a fund are below their set expense cap. When this scenario occurs and you select the Total Fund Recoupment option for a special waiver, the system calculates the basis point difference between the expense cap and gross expenses for each share class. The system uses the share class which has the lowest basis point difference to calculate the amount of the total fund recoupment.

The system processes special waiver recoupments when you process special wavers. You can also set up recoupments for reimbursements. 

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