How are the asset-based management fees computed? Are there different options I can choose from?
Managers typically calculate asset-based management fees in one of three ways:
- Quarterly in advance – The manager is permitted to withdraw a full quarter of fees at the beginning of each quarter. This method offers the greatest liquidity and is the most popular with our managers. The fee is computed by multiplying each limited partner’s quarter-opening capital account by 1/4 of the per annum rate.
- Monthly in advance – Essentially the same as the “quarterly in advance” method, but with monthly rather than quarterly periods and rates.
- Monthly in arrears – The management fee is based on adjusted capital account balances after gains and losses for a completed month have been allocated.
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