5. FEES AND COMPENSATION
A. INFINITAS CAPITAL ABSOLUTE RETURN PORTFOLIO AND THE BEST IDEAS STRATEGY
The Infinitas Capital Absolute Return Portfolio offers two fee options. Option 1 charges a
performance fee that is paid quarterly in arrears and is 20% of the Account’s “high water mark”
gain but does not charge an annual fee. The performance fee will be assessed on the returns of
such accounts at the end of each quarter. Option 2 charges a performance fee that is paid annually
in arrears and is 20% of the Account’s “high watermark” gain and a 1.00% annual fee that is
calculated (and withheld) daily and paid monthly to Infinitas for clients holding their assets at
Interactive Brokers, or is paid monthly or quarterly in arrears, for clients using other third-party
custodians.
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The Infinitas Best Ideas Strategy offers two fee structures. Option 1 for non-discretionary accounts
charges a performance fee that is paid as a percentage of the profit made in the trade. The
performance fee is up to 30% of the Account’s “high water mark” gain with no annual fee. The
performance fee will be assessed on the returns of such accounts when the position is liquidated
or when otherwise agreed to in writing in advance. Option 2 for discretionary accounts charges a
performance fee that is paid annually in arrears and is 20% of the Account’s “high watermark”
gain and a 1.00% annual fee that is calculated (and withheld) daily and paid monthly to Infinitas
for clients holding their assets at Interactive Brokers, or is paid monthly or quarterly in arrears, for
clients using other third-party custodians.
In determining the return on client accounts, Infinitas Capital considers the “high water mark,” the
greater of the initial investment and the highest end of billing period value of the assets previous
to the current billing period (as adjusted for deposits and withdrawals of capital).
The performance fee is calculated as follows: Infinitas Capital will receive a percentage of the Net
Capital Appreciation (i.e. capital appreciation less capital depreciation and any accumulated net
capital depreciation carry-forward from prior billing periods) of each client’s account. The
performance fee is payable only if and to the extent that there is Net Capital Appreciation of the
client’s account during the performance fee period (as adjusted for withdrawals of capital).
In the event that Infinitas Capital fails to achieve any Net Capital Appreciation (including relative
to the high-water mark as defined above) during the performance fee period, no performance fee
would be due to the Adviser for that quarter of management. All performance fees will comply
with Section 205 of the Investment Advisers Act of 1940, Rule 205-3 there under, or similar state
statutes, as applicable.
Infinitas Capital in its discretion may waive all or any portion of the performance fee or may agree
with a client to other changes to the performance fee by written agreement only.
The performance fee is separate and distinct from brokerage fees, transaction fees, and other
related costs and expenses that are incurred by the client. Clients may incur certain charges
imposed by custodians, brokers, third party investment and other third parties such as fees charged
by managers, custodial fees, deferred sales charges, odd-lot differentials, transfer taxes, wire
transfer and electronic fund fees, and other fees and taxes on brokerage accounts and securities
transactions. Mutual funds and exchange traded funds also charge internal management fees, as
disclosed in a fund’s prospectus, which are separate and distinct from the fee. Such charges, fees
and commissions are exclusive of and in addition to the Infinitas Capital’s fee, which it does not
receive any portion of these commissions, fees, and costs. For additional information on the firm’s
brokerage practices please see Item 12, below.
Performance Based Management Fee Example:
Client A is a qualified client who contracts Infinitas Capital for management of his/her portfolio
and assumes client A has a $1,000,000 portfolio. The performance fee charged is payable only if
and to the extent that the net capital appreciation of the clients account exceeds any net capital
depreciation accumulated in prior quarters (as adjusted for withdrawals of capital). For example,
suppose client A has $1,000,000 under management with Infinitas Capital and achieves a 10%
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return for a full quarter of management, which equates to a $100,000 return. Also suppose that
there was a $20,000 carry forward loss from a previous quarter. Infinitas Capital’s performance
fee would be calculated as follows: the entire gain of $100,000 less a carry forward loss of $20,000
equals $80,000 multiplied by 20% equals a performance fee due to the Adviser of $16,000.
Termination of Infinitas Capital Absolute Return Portfolio
A client may terminate this service for any reason within the first five (5) business days after
signing the Infinitas Capital Absolute Return Portfolio Agreement (“Contract”) without any cost
or penalty. Thereafter, the Contract may be terminated at any time by giving 30 (30) days written
notice to Infinitas Capital, LLC at 99 Hudson Street 5 th fl, New York, NY 10013. In the event that
the client terminates the managed account before the end of the quarter and there is a net return
during the performance fee period, the client shall be billed performance fee on assets under
management for all profits accrued during the performance period to termination date, as agreed
upon in the Contract.
B. INFINITAS CAPITAL FOCUS PORTFOLIO
The Infinitas Capital Focus Portfolio charges an annual management of 2.00% but may be waived
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