Fees

Setup: Step 2

Fees are optional and can be charged to anyone depositing into your Vault. All fees detailed in this section are paid out in newly created shares. There are three types of fees you can select as a Vault Manager, detailed below.

Fee configurations can only be changed while migrating from one version of Enzyme to the next. Think carefully about the fees you charge.

Note that in the screenshot, all fees are toggled on for display purposes. If you do not plan to charge a fee, make sure it is toggled off.

Management Fees

A management fee is a periodic payment that is paid by product subscribers to the Vault Manager. The fee is calculated as a percentage of assets under management and is independent of Vault returns. More detailed information on how this is calculated at a protocol level can be found here.

Performance Fees

A performance fee is a percentage based fee which is paid by depositors to the Vault Creator out of the positive returns made over a pre-defined period. The pre-defined period is referred to as a Crystallisation period (typically a year, or a quarter). The returns are benchmarked against the denomination asset.

Vault returns are initially benchmarked against "1". For every period thereafter, the benchmark is reset to what is known as a High Water Mark (HWM). The HWM is the product GAV at the time the performance fees are paid out. If you receive subscribers when GAV is below HWM, they will pay zero performance fees until GAV is back above the HWM. Subscribe who enter when the product is above HWM, they will pay no fees if the fund ends the period below HWM.

More detailed information on performance fees can be found here.

Crystallisation Period

The crystallisation period is a parameter which can be set by the Vault Manager whilst setting this fee.

Entrance Fee

An additional entrance fee can be charged to subscribers by the Vault Manager. This can be defined as a percentage of the total investment and can be configured to send this fee to the product's Vault or directly to the Vault Manager.

• Why have an entrance fee ? Such a fee could deter traders from subscribing and then redeeming in the same transaction to capture possible small arbitrage opportunities which may arise. Such an attack would come at the expense of longer term depositors.