How/When would you take out performance fees?

pistolpt · May 11, 2012

Actually IB has a pretty simple set up - and I finally found a form that lets you choose when/how you want fees taken out. Not sure on the $$$ limit of the account, but I know you can have 15 friends and family accounts under one master without registering with the SEC.

oldtime · May 14, 2012

I don't know how they do it these days, but when we set up these accounts, the trader got a percentage of the profits paid monthly, and then a percentage of the gross was deducted quarterly (usually split some way between the trader and the firm.)

Keep in mind, you had an old high, and a new high, and the the trader didn't get paid again until he took out the new high, and that included overcoming his percentage of the profits and the firms percentage of the gross.

The firm got their percentage of the gross every quarter no matter how bad the performance was.

EliteThink · May 14, 2012

monthly

Stok · May 14, 2012

Quote from heech:

No, you can certainly "show" performance fees every month... But they'd just be liabilities/fees due. That's what I do, but fees only crystallize into my accounts quarterly.

heech, so you charge your performance fee quarterly?

heech · May 14, 2012

Quote from Stok:

heech, so you charge your performance fee quarterly?

Yes. My fund admins calculate fees monthly, and shows it on the investor statement... but it only "crystallizes" at the end of the quarter (or if the client takes a withdrawal, of course). If I give up some gains before the end of the quarter, the fees are reversed.

If I lose money *after* the end of the quarter, the fees I received previously are all mine, mine mine!!

Bison42 · May 14, 2012

Do you understand what it means to be a "Fair Weather" person? You complain when things underperform and you don't want to pay when they outperform.

Go along with the fees or do it yourself!!!!

Alcibiades · May 21, 2012

Quote from Bison42:

Do you understand what it means to be a "Fair Weather" person? You complain when things underperform and you don't want to pay when they outperform.

Go along with the fees or do it yourself!!!!

I think the gent first asking wanted to know which fee
structure would be less inclined to hamper profits within
said accounts .

Stok · Jun 5, 2012

heech, I think you can answer this: So, reporting past performance, how do you report to take into account a 0/30% fee quarterly? For ex this year, here are my monthly gross % P/L:

Jan 1.65%
Feb 10.89%
Mar 9.94%
Apr -13.23%
May 15.42%

So, reporting that, and doing a 30% perf fee quarterly, how would the Jan, Feb and Mar numbers be reported? The gross is 23.95%, with after fee of 16.75% for Q12012.

heech · Jun 5, 2012

Quote from Stok:

heech, I think you can answer this: So, reporting past performance, how do you report to take into account a 0/30% fee quarterly? For ex this year, here are my monthly gross % P/L:

Jan 1.65%
Feb 10.89%
Mar 9.94%
Apr -13.23%
May 15.42%

So, reporting that, and doing a 30% perf fee quarterly, how would the Jan, Feb and Mar numbers be reported? The gross is 23.95%, with after fee of 16.75% for Q12012.

I would have that as:

Jan: 1.16%
Feb: 7.62%
Mar: 6.96%
Apr: -13.23%
May: 15.37%

You might want to double my math, especially on May.. but you get the idea.

Stok · Jun 5, 2012

Quote from heech:

I would have that as:

Jan: 1.16%
Feb: 7.62%
Mar: 6.96%
Apr: -13.23%
May: 15.37%

You might want to double my math, especially on May.. but you get the idea.

OK, that is what I thought, but the compounding effect makes the numbers off a bit...I guess that is just the way it is for reporting monthly net numbers then. I assume this is also what the CFTC/NFA guidelines are when reporting prop accounts as well?