Manager fees

This section explains the manager fee structure and its mechanics on Valio
There are 2 types of manager set fees on Valio:
  1. 1.
    Management fees
  2. 2.
    Performance fees
The vault manager can configure these to whatever values they like. These can be set only on vault creation and can not be changed after.
Management fees
Management fees are set as % annually. These are the fees charged by a manager that are not performance dependent. They are released to the manager every block, and can be claimed any time.
Performance fees
Performance fees are based on the "high watermark" principle. This means that the manager can only claim additional performance fees when they exceed the Vault value at which performance fees were claimed previously.
Suppose a manager sets a 2/20 fee structure (2% management, 20% performance fees)
Suppose also their initial Vault AUM is 1m USDC. The manager achieves a 30% return in 6 months to achieve a total Vault value of 1.3m USDC. How much in performance fees are they entitled to? The manager made 300k USDC, so they are entitled to 20% of that = 60k USDC The next time they will be able to claim performance fees, is when the Vault value exceeds 1.3m So suppose in 6 more months, the Vault value becomes 2m USDC. Relative to the previous high watermark of 1.3m, the manager has earned additional 700k. Thus, they would be entitled to: (current Vault value - previous high watermark)*performance fees, which in this case: (2m - 1.3m)*20% = 700k*20% = 140k USDC