The Manager only receives a performance fee if the overall Pool shares have an appreciated price beyond the previous high water mark, and not on an investor-to-investor basis. For example, an investor may have a 50% return (ROI), but if the pool has not reached its high water mark then performance fees will not be minted. The Manager also has the right to mint performance fees at any time if there are any are available, in its sole discretion.
The Performance Fee, if any, is automatically calculated and minted upon any new deposit or withdrawal transaction of the Pool. Performance Fees are only minted if available. A new high-water mark is then established if the Fee function is positive.
A high-water mark constitutes the highest level reached by the Pool since taking the latest performance fee. The investment manager is required to bring the net asset value of the Pool above the high-water mark before it is entitled to another performance fee.
To account for Performance Fees, new shares are minted. These newly minted shares are transferred to the Manager’s wallet and the Manager's balance of Pool shares increases. Performance allocations to the manager are managed through token inflating to reduce trading fees, portfolio turnover, rebalances, and on-chain activity. This method also aligns the Manager's incentives with the overall performance of the Pool. When an investor exists, the shares are burned in full.
There are currently no clawbacks available to investors, or the ability to establish a preferred return to investors before managers can receive a Performance Fee.
The formula for the amount of new Pool shares the manager receives as a Performance Fee is:
Max(Token Price-Token Price at Last Mint, 0) * Total Token Supply * (Manager Fee Fraction / Token Price)
To reiterate, the Performance Fee function is called every time there is a new deposit or withdrawal. If the 'Token Price-Token Price at Last Mint' is negative, the whole formula is multiplied by zero and thus no performance fees are taken. This means the current token price must exceed the NAV at the time the last performance fee was taken, or the high water mark. The logic of the performance and admin fee is executed via interacting with a Pool’s own proxy contracts, of which the implementation used across all Pools can be found here: Polygonscan.
Entry Fees: Currently Not Available
Exit Fees: Currently Not Available
Performance Fee: Set by the Manager
Management Fee: Set by the Manager
Performance Fees and Management Fees may be adjusted by Managers within the dHEDGE management interface. When the Manager does so, all Pool investors receive an announcement and Fee changes take place after 30 days from the time of the announcement. To view the announcement, investors need to visit the manager’s pool address within the dHEDGE app and a notification will appear.