Set management fee terms

By the end of this guide each share class of your holding will have its management fee terms set: the rate, the basis the fee is charged on, how often it's charged, the day it's charged and the date the terms take effect. You'll also be able to check the charge dates those terms produce and change a rate later without rewriting past periods.

Open the Fees tab

Open Holdings, select a holding, and choose the Fees tab, which sits right after Classes. The tab is available on funds and on assets alike.

The Management fees section lists every share class on the holding, one row each, even when no terms are set yet. Each row is in one of these states:

• Set: the class has terms. The row shows the current rate, the basis and the effective date. Select the row to open its terms.
• Not set, with a prompt: a class that normally carries a management fee but has no terms yet. The prompt is there so a fee doesn't go uncaptured.
• Not set, without a prompt: a debt class. You can give it terms if it carries a fee, for example preferred equity set up as a debt class, but it isn't flagged as missing, since a lender tranche usually has no management fee.
• No option to set terms: a promote class. The promote is the sponsor's own position, so it can't carry a management fee.

Set the terms for a share class

1. In Management fees, select the share class's row to open its terms editor. The editor sets terms for that one class only.
2. Enter the fee rate as a percentage.
3. Choose the basis the fee is charged on: committed capital charged in advance (measured at the start of each period), committed capital charged in arrears (measured at the end of each period), or contributed capital weighted by day across the period (settled in arrears).
4. If you chose the day-weighted contributed-capital basis, choose the day count to use. This field appears only for that basis, and it's independent of any day count set elsewhere on the class.
5. Choose the cadence, such as quarterly or annual.
6. Choose the charge day: a day of the month from 1 to 28, or the last day of the month.
7. Enter the effective date, the date the terms start to apply. The field starts empty and is required.
8. Check the preview of the next charge dates. It shows dates only, not amounts.
9. Save. Only the class you opened the editor from is updated.

How the charge dates are worked out

You don't enter charge dates directly. The first charge falls on the first charge day on or after the effective date, and each later charge is one cadence later. For example, a quarterly fee effective February 15 with a charge day of 1 is first charged on March 1, then June 1, and so on. Terms effective January 1 with a charge day of 1 are charged right away on January 1. A quarterly cadence always gives one charge in each calendar quarter.

The charge day and the effective date are separate fields. Your terms can take effect on any date, such as the 31st, without changing the day charges fall on.

Change a rate or correct the history

The terms editor shows the class's term history as a dated list and marks which entry is current. Terms stay in force until the next entry's effective date takes over.

1. Open the class's terms editor from Management fees.
2. To change the rate going forward, for example a step-down after the investment period, add a new entry with the new rate and the date it takes effect. Earlier entries are kept, so periods before that date still use the earlier rate.
3. To fix an entry that was entered wrongly, edit it or remove it from the history.
4. To record terms that applied before your first entry, add an entry with the earlier effective date. It's added to the history without changing the existing entries.

Check your terms

After saving, the class's row in Management fees shows its rate, basis and effective date. When every class with terms shares the same cadence and charge day, the next charge date is shown once for the holding. When the classes differ, it's shown on each row. The Classes tab also shows each class's management fee rate in its own column.

Setting terms doesn't charge anyone. A management fee is charged only when you record a fee run for a period. To bill a period, see the guide to recording management fees and expenses. If something doesn't look right, contact Covercy support.