| Serial No. | Nature of Fees | Annual Fees |
|---|---|---|
| 1. | Management (Fixed) Fee (on funds under management) | 0.50% |
| 2. | Performance Fee (on returns above 7%) | 20% |
| 3. | Other Incidental Charges: Brokerage (0.10%), Custodian Fee (0.04%), Demat (NSDL) Charges, Stamp Duty, Taxes etc. | At Actual |
- The fee charged by Stalwart Investment Advisors comes with a certain underlying philosophy – we deserve to earn only once our partners have earned.
- Keeping this in mind, the fixed fee is kept at a nominal 0.50% of funds per annum, just to cover the account management costs. The comparable fixed fee in other PMSs & Mutual Funds is 1-2%.
- Only when annual returns are above the hurdle rate of 7%, a performance fee of 20% on excess returns (above 7%) would accrue.
- While calculating performance fees, we follow the three best practices keeping in mind the interest of our partners: 1). hurdle rate, as well as, compounding on the initial investment even in down/negative years, 2). high water mark so you don’t pay fee on same gains again & 3). on net returns after adjusting for all expenses.
Fee Illustration – Single Year
Fee Illustration – Multi Year
Fee Illustration – Terminology
*(F) Hurdle Rate is the minimum return a portfolio should generate before any performance fee can kick in. When the return is 10% and the hurdle rate is 7%, the fee
would be calculated on excess returns of 3%. We follow ‘hurdle rate compounding’ on the initial investment even in down years which is a fair practice in the interest
of our partners (investors) and is in stark contrast with many of the larger PMS peers.
*(G) High water mark (HWM) is the highest value of the portfolio ever achieved. To deserve a performance fee, the portfolio should be above the hurdle rate as well as
HWM. For instance, Rs 100 portfolio goes to Rs 130 leading to a performance fee in year 1. In the subsequent year, the value drops back to Rs 100 and a year later it
again goes back to Rs 130, there will be no performance fee in year 3 as the fund is still not above its prior highs (HWM). This protects investors from paying performance fees twice on the same gains.
For simplicity, we have not accounted other expenses like brokerage, STT, custodian fee, fund accounting, etc. which all put together work out to be about 0.20-0.25%
of fund value per annum.