Set up a management fee
A management fee is based on the average NAV of the fund over the period. The average NAV is calculated based on daily values. To calculate the number of days in the period, FA Fund Management uses the holiday calendar that you define for the fund in the fund settings.
Example: The yearly management fee is 0,1%. The fund's NAV is 365 000 EUR during the calculation period from Saturday, 4 March 2023 to Monday, 6 March 2023. The used day count convention is "ACT/ACT ISDA" and the selected holiday calendar is "Saturday/Sunday weekends". The calculated fee is 365 000 EUR * 0,1% / 365 days * 1 day = 1 EUR. If we change the holiday calendar to "No holidays/weekends", the fee is calculated for all three days and amounts to 3 EUR.
Choose or create a fee formula
Fee formulas in FA Fund Management determine the calculation method, including the fee parameters and the day count convention used. You can choose one of the pre-made configurations or create your own formula if the existing ones don't suit you.
Available management fee formulas are:
Formula | Description | Transaction type |
|---|---|---|
Accrued management fee (ACT/ACT) | Management fee with fixed annual percentage. The calculation is based on the end-of-period NAV and uses the ACT/ACT day count convention. | Management fee, MFEE |
Accrued management fee on end of period GAV (ACT/365) | Management fee with fixed annual percentage. The calculation is based on the end of period GAV. GAV includes:
| Management fee, MFEE |
Accrued management fee on end of period GAV (ACT/ACT) | Management fee with fixed annual percentage. The calculation is based on the end of period GAV. GAV includes:
| Management fee, MFEE |
Accrued management fee with daily transactions (ACT/ACT) | Accrued management fee with fixed annual percentage. This fee formula is a variant of "Accrued management fee (ACT/ACT)" that creates a separate fee transaction for each date during the calculation period. | Management fee, MFEE |
To create your own fee formula
Open the NAV status view, click the gear icon in the top-right and choose Fee formulas.
Click Add formula and fill in the fields:
- Formula name
The name of the formula. You will see it when you choose the fee formula in the fund or share class settings.
- Code
The formula code used to identify the fee formula in the system.
- Fee type
Fee type. Select "Management fee".
- Transaction type
Transaction type to use for the fee accrual: choose "Management fee (MFEE)".
- Create daily transactions
Create fee transaction for each day of the calculation period (by default, FA Fund Management creates one summed fee transaction per calculation period).
- Day count
The day count convention to define the number of days in a year and the number or days in the calculation period.
- Calculation base
NAV to use for the fee calculation: previous (for the previous period) or current (newly calculated).
- Exclude cash in base
Exclude account balances when calculating the average market value. By default, all account balances are included.
- Description
Fee formula description.
Save the changes.
Define the fee parameters
The next step is to include the fee in your fund's fee structure. You can apply the management fee on the fund or on the share class level. Fund-level fees are applied to all share classes. They are calculated first, in the order you place them in the fund settings, followed by the share class fees.
To define the fee parameters:
In the fund settings:
Set the fee capitalization account for the fund in the Basic info tab. Enable Set as fee capitalization account for the cash account you want to use for fee capitalization. You can only set one account for fee capitalization per fund. If you do not set a fee capitalization account, the system uses the account you marked as the default account in the Basic info tab.
(Optional) If you want to use a separate schedule for calculating fees ( see Ongoing fees for details), set it up in the Schedules tab.
Define the fee crystallization schedule in the Schedules tab. For details about schedule settings, see Create a fund.
Add the management fee on the fund or share class level. Open the Fee structure tab in the fund or share class settings, add the fee formula, percentage and other parameters (for details about fee parameters, see Create a fund and Add share classes). Select Use crystallization schedule for capitalization in Additional options.
After you set up the fee calculation and capitalization, FA Fund Management creates accrued fee transactions every time you calculate NAV. On the fee capitalization date, the fee amount is transferred from the cash account to the accrued fees account when you accept NAV.