Applicability
Applicable to: Gate Web
Preparation: Logged in to Gate with asset management product creation permissions
Estimated time: 5 minutes
Objective
This guide will walk you through how to set performance fee parameters for asset management products on Gate Web, and understand the calculation rules and records.
Product Performance Fee Operation Guide
The performance fee is a common incentive mechanism in asset management products. When a product generates returns, the manager is entitled to charge a fee based on a percentage of the excess returns. This is a standard feature in asset management products and helps align incentives, encouraging the manager to achieve better investment performance.
Core Mechanism
The performance fee is calculated using an annualized excess return method with tiered accruals:
- The fee is charged only when the investment return exceeds the benchmark APY .
- The fee is applied only to the portion exceeding the benchmark APY.
- Returns for each unit are calculated using the FIFO (First-In, First-Out) method based on the holding period.
Two Key Parameters
- Benchmark APY (0%–50%): The threshold above which the performance fee is charged. For example, if set to 8%, no performance fee is charged when the annualized return is ≤ 8%. Only the excess portion is subject to the fee.
- Performance Fee Rate (0%–70%): The percentage applied to the excess return. For example, if set to 30%, 30% of the excess return will be charged as a performance fee.
Configuration Instructions
Step 1: Set Performance Fee
Select [Create Product] in the asset management page and locate the [Performance Fee] section.
- Enable Performance Fee : Enabled by default; can be disabled if not required
- Benchmark APY : Enter a value between 0–50 (up to two decimal places)
- Reminder: Enter a number between 0 and 50
- Example: Enter 8.00, which represents a benchmark APY of 8%.
- Performance Fee Rate : Enter a value between 0–70 (up to two decimal places, cannot be 0)
- Reminder: Enter a number between 0 and 70 (0 excluded)
- Example: Enter 30.00, which represents a performance fee rate of 30%.
Step 2: Confirm Performance Fee
When clicking [Create Product], a confirmation pop-up will display the performance fee details. Please verify the information before submission.
Step 3: View Performance Fee
After the product is created, the performance fee details can be viewed under [Product Details] - [Basic Information], including the benchmark APY and performance fee rate. These settings cannot be modified after product creation.
Performance Fee Calculation
Accrual Timing
The performance fee is automatically charged in the following scenarios: upon unit redemption, token dividend distribution, dividend reinvestment, and product liquidation.
Calculation Details
Accrual Conditions
When R ≤ B, no performance fee is charged.
When R > B, the fee is applied to the excess portion.
- R: Annualized Return
- B: Benchmark APY
Formula
Performance Fee = Number of Units × NAV per Unit × (R – B) × Holding Days / 365 × Performance Fee Rate
Example
Assume:
• Benchmark APY: 8%
• Performance Fee Rate: 30%
• NAV per Unit at Subscription Confirmation: 1.0
• NAV per Unit at Redemption (After 365 Days): 1.2
• Units Held: 100
• Annualized Return (R) = (1.2 – 1.0) / 1.0 × 365 / 365 × 100% = 20%
Since R (20%) > B (8%), the excess return is 12%.
Performance Fee = 100 × 1.2 × (20% – 8%) × 365 / 365 × 30%
= 100 × 1.2 × 12% × 30%
= 4.32
Dividends and Performance Fee
Token Dividend : Dividend Amount = Gross Dividend – Performance Fee
Dividend Reinvestment : Additional Units = (Dividend Amount – Performance Fee) / NAV per Unit After Dividend. Even if all investors choose reinvestment, the manager will still receive the performance fee.
Performance Fee in Dividends
Step 1:Estimate Performance Fee for Dividends
In the dividend application window under [Product Details] - [Basic Information], the following fields are available:
Estimated Performance Fee :The performance fee estimated based on all outstanding units using the latest NAV and the input dividend per unit. (Tooltip: The performance fee estimated for this dividend distribution)
Total Performance Fee :The total performance fee assuming all units are fully redeemed at the latest NAV. (Tooltip: The total performance fee of all current units of the products. Following a successful dividend distribution, the performance fee calculation for the remaining units will be reset starting from the dividend payment date.)
Step 2:View Performance Fee for Dividends
In [Product Details] - [Dividend Record], you can view the [Performance Fee] column.
Performance Fee in Transactions
In [Subscription and Redemption] - [Confirmed Subscriptions & Redemptions], the [Performance Fee] column shows:
- Subscription :Displayed as "–" (no performance fee is generated)
- Redemption / Liquidation / Dividend / Dividend Reinvestment :Displayed as the performance fee amount
- If the performance fee is 0, displayed as "0"
- If the performance fee is not enabled for the product, displayed as "–"
FAQ
Q1: When does performance fee start to accrue?
A: Performance fee is charged only when the investment's annualized return exceeds the benchmark APY. For example, if the benchmark APY is set to 8%, no fee is charged when the annualized return is ≤ 8%. Only the excess portion is subject to the fee.
Q2: Can performance fee parameters be modified after product creation?
A: No. Performance fee settings cannot be modified after product creation. Please carefully confirm the benchmark APY and performance fee rate when creating the product.
Q3: Does dividend reinvestment generate performance fee?
A: Yes. Even if all investors choose dividend reinvestment, the manager will still receive the corresponding performance fee.
Q4: How can I view the performance fee amount for a specific transaction?
A: In [Subscription and Redemption] - [Confirmed Subscriptions & Redemptions], each redemption, liquidation, dividend, and dividend reinvestment record will display the corresponding performance fee amount.
Disclaimer
The content provided herein is for reference and educational purposes only and does not constitute any financial, investment, trading, or legal advice, nor does it constitute an offer or solicitation to buy or sell any digital assets. Gate makes no express or implied representations or warranties regarding the accuracy, completeness, or timeliness of the information contained herein. Product features, interfaces, rules, and fee structures may be updated or adjusted at any time. Please refer to the latest announcements and the actual information displayed on the Gate platform for the most accurate details.
Digital asset investments involve significant risk, and prices may fluctuate substantially. You may lose the entire amount of your investment. Please make decisions cautiously based on your own financial situation and risk tolerance after fully understanding the associated risks. If necessary, you are advised to consult an independent professional financial or legal advisor.
For more information about potential risks, please refer to Gate's Risk Disclosure and User Agreement.
