Advisory Fee Charged by QQFund.com

(2% Management Fee Per Year)

 

Hedge fund managers typically use an advisory fee structure that includes both a management fee and a share in the fund's profitability, often referred to as a performance fee, incentive fee or carried interest. This approach to compensation aims to align the manager's interests with those of the investors. The typical management fee for hedge funds is around 2% (per year) of net asset value, with an additional around 20% performance fee on profits. The hedge funds industry often refers to a 2 and 20 (or 2/20) fee structure.

 

1.Management fees are generally fixed percentages (around 2% (per year)) charged on the assets under management (AUM) or committed capital.

2.Performance fees (incentive fees or carried interests) compensate managers for generating profits above a certain threshold.

·    Typical Structure: ​Performance fees are commonly around 20% of the profits generated. ​They are typically paid on the realized value appreciation of assets in the fund, usually after a preferred return threshold (i.e., “hurdle rate”) has been met.

·    Hurdle Rate: ​A hurdle rate is the minimum return a fund must achieve before the manager can collect a performance fee. ​This ensures managers are rewarded only for returns exceeding what investors could have earned elsewhere. ​A "hard hurdle" means the performance fee is calculated only on returns above the hurdle rate.

·    High-Water Mark (HWM): ​This mechanism ensures investors do not pay for the same performance twice. ​If a fund's value declines, the manager must bring the fund's value back above its previous peak (high-water mark) before new performance fees can be accrued.

·    Incentive Alignment: ​These fees aim to reward managers for generating alpha, which is the portion of returns attributable to their skill, rather than just market beta.

 

3.In addition to management fees and performance fees, alternative investments can involve various other costs:

·    Upfront or Ongoing Servicing/Placement Fees: ​These fees are often based on the total investment amount and can be as high as 2% or more. ​Ongoing servicing fees can be as high as 2% or more of the investment's value.

·    Redemption Fees: ​Some investments may have direct or indirect costs for liquidating a position, especially if done shortly after purchase or if the investment has limited liquidity, with fees potentially as high as 2% or more of the investment.

·    Organizational and Offering Expenses: ​For certain legal structures, particularly new offerings, investors might incur expenses related to creating the legal structure and marketing the fund, which can decrease the capital available for investment.

·    Operational Expenses: ​Funds may also charge for expenses resulting from investment activity, such as costs associated with maintaining short positions in a hedge fund. ​Ongoing expenses for fund administration, tax document preparation, auditing, and custodial services are also common.

Depside all the fees (as described above) may be potentially charged by other hedge fund managers, since the inception date of QQFund.com Alpha Beta Program (on September 8, 2008), QQFund.com had decided to charge two percent (2%) management fee per year for QQFund.com Alpha Beta Program.

 

The following are used to calculate the advisory fee charged by QQFund.com for QQFund.com Alpha Beta Program.

 

1.To avoid conflicts of interest, neither QQFund.com nor its principal will receive or participate in any commissions or any fees charged by the Client FCM or any other third-party (if applicable).

2.For its advisory services, as the compensation, QQFund.com will receive an annualized percentage asset-based management fee equal to two percent (2%) of the Client Account's Net Liquidation Value (NLV).

3.To avoid conflicts of interest, besides the above management fee, QQFund.com does NOT receive any performance fee, incentive fee, carried interest, accounting fee, commission, upfront or ongoing servicing/placement fee, redemption fee, organizational and offering expense, operational expense, and/or any other fee, etc.

4.The management fee will be applied on a DAILY basis (X business days per year and X is 252 normally). The DAILY management fee is 1/X of two percent (2% annually) of the Client Account’s DAILY Net Liquidation Value (“DNLV”) which is calculated by the Client FCM.

5.For any given day, DNLV is defined as the total BEGINNING assets of the Client Account of such day (including all cash (which also includes the profit and loss of all futures open positions, etc.), market value of all other open positions, interest and accrued interest, etc.) less the total BEGINNING liabilities of the Client Account of such day (including all accrued commissions, advisory fees, etc.) BEFORE the current DAILY management fee for such day is deducted.

6.Example: Assuming BEFORE the current DAILY management fee for a given business day is deducted, the total BEGINNING assets of the Client Account of such day is $100,000 USD and the total BEGINNING liabilities of the Client Account of such day is $0 USD, the advisory fee for such day will be $7.93 USD (= (($100,000 - $0)*2%)/252).

7.The DAILY management fee will be paid by the Client FCM to QQFund.com directly from funds in the Client Account.

8.The advisory fee as described herein will be continually charged starting from THE FIRST DAY to THE LAST DAY regardless of the status of the Client Account, the size of the Client Account or whether there is any trading activity (and/or any position) in the Client Account or not.

9.THE FIRST DAY is defined as the first day when QQFund.com can access the Client Account to manage (i.e., to view, to buy for or to sell for, etc.) the Client Account for Client (even BEFORE any actual trade is performed by QQFund.com).

10.    THE LAST DAY is defined as the day the Advisory Agreement is deemed automatically and officially terminated according to the PROCESS 8: Terminate the Advisory Agreement (as defined in the Disclosure Document).

11.    All DAILY management fees are payable in full at the BEGINNING of the day to which such fees apply.

12.    Normally, DNLV and the advisory fee will be calculated automatically by the Client FCM and the billing will be handled automatically by the Client FCM. The advisory fee will be paid automatically by the Client FCM to QQFund.com directly from funds in the Client Account.

13.    In cases, for some situations, for some reasons, if the Client FCM cannot support above automatic operations, QQFund.com (at its sole discretion) may EITHER do manual operations OR do not manage the Client Account for Client.

14.    After the advisory fee is paid to QQFund.com, QQFund.com will be entitled to retain all of such advisory fee previously paid by Client regardless of the performance of the Client Account before, currently or in the future.

15.    Client agrees to assure payment to QQFund.com of applicable fees within FIVE (5) business days of the date such fees become due and payable. QQFund.com has the right to start the PROCESS 7: STOP/RESUME Trading the Client Account (as defined in the Disclosure Document) and/or the PROCESS 8: Terminate the Advisory Agreement (as defined in the Disclosure Document) should such fees become overdue.

16.    The advisory fee structures and the calculation/payment operations as described in this section above are subject to change at the sole discretion of QQFund.com. QQFund.com reserves the right to increase or decrease the advisory fees it charges Client, to change the method of calculation/payment of these fees, and to charge different fees for different client accounts it manages.

17.    HOWEVER, if the advisory fee applied to the Client Account is to be increased, the Client approval is required again for it to be effective. If Client does not agree to such increase for any reason or no reason, the original fee structure will remain in effect as before. HOWEVER, in this situation, QQFund.com may or may not start the PROCESS 8: Terminate the Advisory Agreement (as defined in the Disclosure Document) to terminate the Advisory Agreement with Client at its sole discretion.