Portfolio Management Service

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Annexure 4A: Illustration for Annexure on Fees and Charges74

This computation is for illustrative purpose only. Portfolio Managers may suitably modify this to reflect their fees and charges.

The assumptions for the illustration are as follows:

a. Size of sample portfolio: ₹50 lacs75 over

b. Period: 1 year

c. Hurdle Rate: 10% of amount invested

d. Brokerage/ DP charges/ transaction charges: Weighted Average of such charges (as a percentage of assets under management) levied in the past year/ in case of new portfolio managers indicative charges as a percentage of assets under management (e.g. 2%)

e. Management fee (e.g. 2%)

f. Performance fee (e.g. 20% of profits over hurdle rate)

g. The frequency of calculating all fees is annual

Portfolio performance: Gain of 20%

Nature of Fees Amount in ₹ Amount in ₹
Capital Contribution

50,00,00076

Less: Any other fees (please enumerate)
XX
Assets under Management
50,00,000
Add: Profits on investment during the year @20% on assets under management
10,00,000
Gross value of the portfolio at the end of the year
60,00,000
Less: Brokerage/DP charges/any other similar charges (e.g. 2% of ₹50,00,000)
1,00,000
Less: Management Fees (if any) (e.g. 2% of ₹50,00,000)
1,00,000
Less: Performance fees (if any) (e.g 20% of ₹5,00,000 – working given below)
1,00,000
Less: Any other fees (please enumerate)
XX
Total charges during the year
3,00,000
Net value of the portfolio at the end of the year
57,00,000
% change over capital contributed
14.00%
Calculation of Performance Fees for above
Serial Nature of Fees Amount in ₹
A
Profit for the year
10,00,000
B
"Less: Minimum profit level (Hurdle Rate @10% on ₹50,00,000)"
5,00,000
C
Amount on which Profit Sharing Fees to be calculated (B-A)
5,00,000
D
Performance Fees (@20% of C)
1,00,000

Portfolio performance: Loss of 20%

Nature of Fees Amount in ₹ Amount in ₹
Capital Contribution
50,00,000
Less: Any other fees (please enumerate)
XX
Assets under Management
50,00,000
Less: Loss on investment during the year @ 20% on assets under management
10,00,000
Gross value of the portfolio at the end of the year
40,00,000
Less: Brokerage/DP charges/any other similar charges (e.g. 2% of ₹50,00,000)
1,00,000
Less: Management Fees (if any) (e.g. 2% of ₹50,00,000)
1,00,000
Less: Performance fees (if any)
XX
Less: Any other fees (please enumerate)
XX
Total charges during the year
2,00,000
Net value of the portfolio at the end of the year
38,00,000
% change over capital contributed
(24.00%)

Charges on Portfolio performance: No change

Nature of Fees Amount in ₹ Amount in ₹
Capital Contribution
50,00,000
Less: Any other fees (please enumerate)
XX
Assets under Management
50,00,000
Add: Profits/Losses on investment during the year @ 0% on assets under management
Gross value of the portfolio at the end of the year
50,00,000
Less: Brokerage/DP charges/any other similar charges (e.g. 2% of ₹50,00,000)
1,00,000
Less: Management Fees (if any) (e.g. 2% of ₹50,00,000)
1,00,000
Less: Performance fees (if any)
XX
Less: Any other fees (please enumerate)
Total charges during the year
2,00,000
Net value of the portfolio at the end of the year
48,00,000
% change over capital contributed
(4.00%)

74 SEBI Cir. /IMD/DF/13/2010 dated October 5, 2010

75 Clause 3 (v) of SEBI/HO/IMD/DF1/CIR/P/2020/26 dated February 13, 2020

76 Illustration has been suitably updated to consider minimum investment amount of ₹50 lakh.

Note: The frequency of charging various fees may be specified for every type of fees in the illustration

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