Fees

The fee structure for an Aleph Vehicle is designed to be configurable by managers, with two primary fee types: management fee and performance fee.

These fees accrue and are processed during the batch settlement cycles, ensuring transparency and accuracy.

Management Fee

The Management Fee is a time-based fee calculated on the assets under management (AUM). It is expressed in basis points per year and accrues on a pro-rata basis over time.

Calculation

The fee is calculated and charged based on the duration elapsed since the last fee payment, as a fraction of the total year. This ensures that the fee is fair and reflects the time the assets were managed, regardless of the batch frequency.

Management Fee = AUM * ( managementFeeBps / 10,000) * (elapsedTime / ONE_YEAR)

Performance Fee

The Performance Fee is a fee charged on new profits earned above a series' High-Water Mark (HWM). It is expressed in basis points (bps) and is only triggered when a series' performance exceeds its HWM.

High-Water Mark (HWM)

The HWM is the price-per-share (PPS) a series must exceed before any performance fee is applied. This prevents managers from charging a performance fee on gains that an investor has already paid for or that occurred before their investment.

Calculation

The fee is calculated on the value of gains that exceed the HWM for a specific series.

Price Per Share = AUM / Total Shares;

if (Price Per Share > HWM) {
  performance fee = (Price Per Share - HWM) * Total Shares * (performanceFeeBps / 10,000);
  // update HWM
}

Fee Accrual

Fees are accrued during the settlement process. At the end of each batch window, the Oracle provides the necessary pricing inputs to the system. Fees are accumulated as shares and are minted to a designated virtual recipient accounts. During this process:

1. Management fees are calculated based on time elapsed and AUM.

2. Performance fees are calculated based on gains above the High-Water Mark.

3. Fee amounts are allocated to special virtual fee recipient addresses:

   • MANAGEMENT_FEE_RECIPIENT: accumulates management fees.

   • PERFORMANCE_FEE_RECIPIENT: accumulates performance fees.

4. These fees remain as shares until collected.

Accountant

The Accountant is a smart contract that manages the collection and distribution of all fees.

1. Accumulation: Fees accumulate as shares allocated to virtual recipient addresses.

2. Collection: The manager triggers fee collection by calling collectFees() on the vault

3. Transfer: The vault transfers accumulated fee shares to the Accountant contract

4. Distribution: Once accumulated, fee shares can be materialized for the underlying assets of the vault. When requested, the fee shares are burned, and the accountant transfers the amount to the vault treasury.

Treasury Management

Each vault has its own treasury address where the manager's portion of fees is sent. Managers can define the address of the vault treasury in which they wish to receive the funds. They can do so by calling the setVaultTreasury function.

Fee Limits

To protect investors, the protocol enforces maximum fee limits:

• Maximum management fee: defined by MAXIMUM_MANAGEMENT_FEE constant.

• Maximum performance fee: defined by MAXIMUM_PERFORMANCE_FEE constant.