# ETF performance fee



## Money172375 (Jun 29, 2018)

has anyone ever seen a fee like this? this is for an ETF that hasn't launched yet.

The ETF’s expenses are made up of the management fee, a performance fee, operating expenses and trading costs. The ETF’s annual management fee is 0.85% of the ETF’s value. Because this ETF is new, its operating expenses and trading costs are not yet available.

The ETF pays a performance fee to the Manager, if any, equal to 15% of the amount by which the performance of the ETF, at any date on which the fee is payable, (i) exceeds the greater of: (a) the initial NAV per share; and (b) the highest NAV per share previously utilized for the purposes of calculating a performance fee that was paid, and (ii) is greater than an annualized return of three percent (3%).

and has anyone heard of the NEO exchange? can you access this exchange on TDDI?


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## james4beach (Nov 15, 2012)

Money172375 said:


> The ETF pays a performance fee to the Manager, if any, equal to 15% of the amount by which the performance of the ETF ...


That sounds like a hedge fund's fee structure. I haven't seen that in an ETF before.

Sounds like the ETF creators are getting greedier. I'm guessing this is a very actively managed fund.


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## gardner (Feb 13, 2014)

Money172375 said:


> and has anyone heard of the NEO exchange?


No, but Google was able to tell me:



> NEO Exchange is a Canadian stock exchange based in Toronto. Marketed as Canada's New Stock Exchange, NEO aims to help companies, dealers and investors by creating a better listing experience, eliminating predatory market behaviours such as high-frequency trading, implementing a unique market making program to ensure liquidity, and offering free real-time market data for all NEO-listed securities.


It would be regulated by the OSC.



> can you access this exchange on TDDI?


This one yielded to google also, and it looks like the answer is yes.


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## gardner (Feb 13, 2014)

Money172375 said:


> The ETF’s expenses are made up of the management fee, a performance fee, operating expenses and trading costs. The ETF’s annual management fee is 0.85% of the ETF’s value. Because this ETF is new, its operating expenses and trading costs are not yet available.


Google found me one hit for this verbiage and it was for a new Horizons fund HRAA.TO:


https://www.horizonsetfs.com/horizons/media/pdfs/fundsummary/en/HRAA_FundSummary.pdf





> Date ETF started:July 29, 2020
> :
> What does the ETF invest in?
> 
> The investment objective of the ETF is to seek long-term capital appreciation by investing, directly or indirectly, in major global asset classes including but not limited to equity indexes, fixed income indexes, interest rates, commodities and currencies


This is a hedge fund. Almost everything it has is either cash or futures contracts on exotic things.

However this one is traded on the TSX, it says, so it may not be what the O/P was thinking of.


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## Money172375 (Jun 29, 2018)

How about this line in the prospectus? This is for PSYK. an new etf launching tomorrow. My kid is throwing some play money at it. It will either be a gold mine or he’ll pay for the lesson that his VGRO was the better choice.

Holders of Units (“Unitholders”) will be able to redeem Units in any number for cash at a redemption price per Unit of 95% of the closing price for the Units on the Exchange on the effective day of redemption.

is this a DSC?


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## fireseeker (Jul 24, 2017)

Money172375 said:


> How about this line in the prospectus? This is for PSYK. an new etf launching tomorrow. My kid is throwing some play money at it. It will either be a gold mine or he’ll pay for the lesson that his VGRO was the better choice.
> 
> Holders of Units (“Unitholders”) will be able to redeem Units in any number for cash at a redemption price per Unit of 95% of the closing price for the Units on the Exchange on the effective day of redemption.
> 
> is this a DSC?


No, it's not a DSC.

This is similar to language in the prospectuses of many closed-end funds. It's a way of ensuring the trading price does not deviate much more than 5% from the NAV. If it does, arbitrageurs should step in to support the price.

It is not a feature you'd want to use -- tendering your shares to the Fundco for 95 cents on the dollar. Most of the time you should be better selling the units into the market. In theory, though, the clause could be useful if trading in the ETF seized up.

That said, I'd expect there is also language saying the ETF company can halt redemptions under certain circumstances -- i.e. when you'd want redeem!


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## Ponderling (Mar 1, 2013)

I can't see the excitement of searching out what amounts to ipo's for etf's.
After start up costs the usual $10 initial float price drops for a few month at least as the start up costs get paid down.

I prefer the wait for a few quarters and see how much AUM they have grown.

Now individual stock listing IPO's I can understand getting interested in


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