Current Period Variable Expense Performance Fee Workflow Example

This example describes the expected workflow of a performance fee that has a rule type of Current Period Variable Expense.

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 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 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 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.

Expense Account Name

Performance Fees

Fee Rule Type

Performance Current Period Variable

Accrual Reset Frequency

Monthly

Accrual Update Option

Accrual Carry Forward


The first August fee rule represents the new variable expense fee rule for August. It has the same values as the July rule, except that the system resets the fee amount to $0.00, and it sets the status to Active.

August Variable Expense Fee Rule Created

August Variable Expense Fee Rule Created

Expense Account Name

Performance Fees

Fee Rule Type

Performance Current Period Variable

Fee Type

Variable

Activity Type

Prospective

Accrual Begin Date

August 1

Accrual End Date

August 31

Fee Amount

$0.00

Status

Active

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

Calendar/Business Days

Calendar

True Up Spreading Method

1 Day


The second August fee rule represents the July true-up that the system will apply in August.

July True-Up Fee Rule Created to Apply in August

July True-Up Fee Rule Created to Apply in August

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. 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.

Effective Date

August 1

Adjusted Return Difference

5.19%

Final Fee Rate

0.0387%

ANA

142,500,500.00

ANA Date

July 31

Days In Year

365.00

Days In Prior Month

30.00

Daily Fee

151.09


The system posts 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 absorbs the difference of $55.00 on the 1st day of August. The rule is Active and the system posts and closes 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)

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