RSSThe Sponsor is the creator of the fund and will typically hold a number of voting shares in the fund, but these are not entitled to any distributions or share in the equity. All of the equity belongs to the investors, typically in the form of non-voting "preferred redeemable shares". The voting shares generally control management of the fund, apart from limited major decisions.
The Investment Manager determines the investment strategy of the fund and makes the investment decisions. The manager earns fees in the range of 1 to 2% of the NAV (Net Asset Value) per annum, calculated and paid on a regular basis. Typically, these exclude any brokerage commissions and trading expenses which are additional expenses of the fund. In addition, many managers take an incentive or participation fee, based upon any increase in the Net Asset Value. These may range from 5% to 50% of the profit or gain. Usually, there is some adjustment provision such that if the NAV goes down, the manager does not get any further fees until the NAV exceeds the previous high. Some investment managers take a percentage of each subscription as a commission, often up to 5%. This may be added to the investment or deducted from the net proceeds. Typically the fee is taken where the manager has to pay commission to other intermediaries.
The Administrator acts as registrar and transfer agent, keeps the books and records of the fund, and calculates the NAV. Depending on the complexity of the fund, the administrator's fees could be as little as a few thousand dollars a year or as much as 0.5 to 0.65 % of the NAV per annum. Sometimes the administrator's fees are included within the management fee. In certain situations, the administrator subcontracts a part of the work, particularly the NAV certification, to the investment manager.
The Custodian holds the fund's cash and investment assets. Commonly, one or more brokers who execute trades on behalf of the fund hold part of the fund’s assets. Custodial Fees can also be a fixed fee or a percentage of NAV. where a broker acts as de facto custodian, it usually charges on a transactional basis. In addition, the fund will also be responsible for all of its own legal, accounting and other administrative expenses, excluding overhead expenses of the manager, administrator, etc.
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