DARWIN Providers, that is, traders whose trades investors are replicating with their investments in their DARWINs, receive a 20% performance fee on the quarterly profits achieved for investors.
The Performance fees section is situated in the upper row of the portfolio.
In order for an amount to appear under the Performance fees label, one of the following has to happen first:
- Either you sell a DARWIN and have profits from it
- Or one of your investments in a DARWIN reaches quarter end and, again, you have profits with this investment
Each row here, refers to a DARWIN in which you hold or held an investment.
You can see:
- the DARWINS’s handle
- your current investment in the DARWIN
- your Closed P&L with it
- your high watermark
- your paid performance fees
- your withheld performance fees
- and the date your quarter ends with each of your investments
Performance fees get paid only when the quarter for an investment ends
If you sell an investment before quarter end, performance fees get retained and they get paid to the trader only on quarter end and only if they still apply. It could happen that, in the same quarter, you first sell an investment with profit, have performance fees retained, and then invest again in the same DARWIN and end up closing your investment quarter with losses. In this case, retained performance fees would be paid back to you, the investor, instead of getting paid to the trader. Paid back performance fees will appear under the "Available" label.
The date your quarter starts with an investment in a DARWIN gets determined by your first investment in the DARWIN. Dates of successive investments in the same DARWIN have no effect on the schedule of quarter ends.
It’s important you keep in mind when your quarter ends because two things happen then:
- The first is that your withheld performance fees, if they still apply, get paid to the trader and will start to appear in the column of paid performance fees.
- The second is that the profits on which you already paid performance fees will start to appear as your high watermark.
For investments not sold, that is, investments for which you don’t have Closed P&L because your P&L is still open with them, performance fees are paid and high watermarks get recorded as well on quarter end. Performance fees charged for open investments will appear under the "Available" label, i.e. they will not get charged on the Open P&L of the investment but directly on your investor account. If you had 0 as available on your investor account, after charging performance fees for an open investment, your "Available" will show a negative amount.
What is the high watermark?
Your high watermark is your profit with each DARWIN for which you already paid performance fee. It means that unless your investment generates new profits, above the high watermark, you won’t be charged any new performance fee. A high watermark ensures that if the quote of a DARWIN falls in one quarter, the performance fee can only ever be charged on any outperformance, above the highest profit ever reached on a previous quarter end.
For example, if you have a profit of 1000 euros in one quarter with a DARWIN and then in the second quarter your investment with this DARWIN loses 300 euros and in the third quarter it adds another 1000, in the first quarter, you would pay performance fee for 1000, in the second quarter you would pay no performance fee at all and in the third quarter you’d pay performance fee only for the new profit, that is, the 700 euros for which you haven't paid performance fee yet.