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.

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. 

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. 

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. 

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.

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.

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.

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

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.

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.

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 1^st day of August. The rule is Active and the system posts and closes it as part of the Trigger Fee event

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