What does that mean for me?
On 24 July, we launched one of the major features planned for 2019 - the Performance fee. With it, Crypto Strategy managers are able to monetize their knowledge by generating returns for investors, and in turn be rewarded with a performance fee for their skills.
We explained how performance fees and high water marks work in a previous blog post.
Most managers that have created a Crypto Strategy before the launch of the performance fee have decided to use it for their Crypto Strategy. And, what does that mean for investors?
You invested in December 2017 (at the peak) or before the performance fees existed.
The market is totally different at this moment, we know. So, if you’ve invested in any of the ICONOMI Crypto Strategies that existed at that time, you don’t have to worry because you will not be paying a performance fee from your investment now. At least until you make a profit.
When do you start paying performance fees?
On the day that the Crypto Strategy switches to a performance fee, we will calculate a high water mark for each user. We will calculate it based on the values at the time you invested.
Let’s say you’ve invested 200 EUR in a Crypto Strategy in December 2017. The manager added a performance fee of 15% and on the day the performance fee goes live, the value of your investment is 150 EUR. This means you will not pay any performance fee until the value of your investment exceeds 200 EUR.
What if you bought and sold, and bought again? In this case, we follow the so-called ‘FIFO’ (first in first out) principle to calculate your average price.
When the market goes down, and up again – do I have to pay the performance fee twice?
In a word – no. The very point of the high water mark is to prevent you from paying twice for the same service. So until the value of your investment reaches the previous peak, you will not be charged any performance fee.
More on high water marks here.
What kind of options do I have, if I don’t agree with the change of fees for the Crypto Strategy I’ve invested in?
You can exit a Crypto Strategy any time you want, you can sell it for euro, bitcoin, or ether.
When do changes take effect?
When the manager decides to charge a performance fee, you will receive an email of such a decision. However, the performance fee will only apply after one month or more (you will receive another email on the day the performance fee takes effect). On the other hand, in case the manager decides to reduce the performance fee, such a change applies instantly.