Performance Calculation

Overview

One of the most important concepts for a fund manager to understand is the performance of their fund, which Repool calculates for both you and your investors.

This calculation is not the same as what you see in your brokerage account(s), as - alongside underlying fund accounting being slightly more nuanced than what a brokerage shows, though that impact should be minor - it incorporates other factors that first-time managers are often not used to thinking about, such as expenses, management fees, incentive allocations (performance fees), and more.

❗ Point 1: Your funds actual performance will generally be LOWER than what you see in your brokerage accounts

Fees, fees, fees. If you are charging any sort of fees to your investors OR expensing anything - such as the cost of Repool - this will come out of the fund's performance when you view it. This means that the smaller your fund's net assets, the more impact your fund operating expenses will have.

For example, if you have a $1,000,000 fund with a return of 5%, that would mean that your brokerage account(s) likely sum to around $1,050,000 or similar. However, if we assume the net fund services costs being expensed to the fund are $25,000, then you and your investors will only see a return of 2.5% - half of what your trading performance is. For investors, they would see potentially even less in their own NAV charts, as if you're also taking a 2% management fee, that must also come out of the investor's returns.

❗ Point 2: NAV is not real-time

The cadence of your NAV calculation varies by fund, asset class, and Repool service, and may range from daily to monthly, asset class depending. Moreover, certain assets may be valued in a way from an accounting perspective that is different than your own internal modeling (generally for alternative assets which, for example, may be valued at a fixed price until sold for fund purposes, even if you otherwise are confident the value has appreciated).

If you have an on-brokerage only, "simple asset" fund (i.e. purely on-brokerage securities or CFTC/NFA-related assets, and certain digital assets) then NAV is likely updated on a daily basis. However, other funds (such as defi funds) may only have their NAV updated monthly, due to the complexity of the accounting and certain backward looking adjustments and reviews that must be completed.

Please communicate this to your investors early to help set appropriate expectations!