Item 5. Fees and Compensation
James Alpha charges management fees (“Management Fees”) to its clients for its
advisory services.
In addition, James Alpha, LLC, an entity under common control and ownership, will
receive an annual “Incentive Allocation” as described below. James Alpha, LLC is the
General Partner to all of our Private Funds.
MANAGEMENT FEES: With respect to each Private Fund, James Alpha Management,
LLC shall charge a management fee up to 0.50% per quarter (2.00% annually) based on
the market value of the assets held by the Private Fund, adjusted for capital contributions
at the beginning of each quarter. The management fee will be directly debited from each
Private Fund investor’s capital account quarterly by the administrator, in advance, in
accordance with the applicable Private Fund’s organizational or offering documents. With
respect to the Feeder Funds, as applicable, the Management Fee will only be charged
once, either at the feeder or master fund level.
INCENTIVE ALLOCATION: Subject to a loss recovery provision, or loss carryforward
(as discussed below), a Performance Allocation equal to 20% of any net capital
appreciation (including net unrealized gains) will be charged by the General Partner of
the Private Funds on a quarterly or annual basis depending on the fund.
No Incentive Allocation will be made until any net loss previously allocated to an
investor’s capital account has been offset by subsequent net profits. Any such loss
carryforward will be subject to reduction for withdrawals on a pro rata basis. Additional
capital contributions will not affect an investor’s loss recovery calculation.
ALLOCATION OF EXPENSES: Each private fund agreement will provide specific
details to the investor on the amount of fees and expenses that are allocated between
the funds and the advisor. This is to include operating expenses, such as
reimbursements, offsets, broker dealer expenses, consulting fees, compliance
expenses, and any fee or expense that could plausibly be construed as an expense
properly borne by the advisor rather than the funds.
Investors must understand the proposed method of compensation and its risks
prior to investing in any of the Funds.
GENERAL INFORMATION:
Personal Investments in Funds: Certain executive officers and/or other employees of
James Alpha have invested or may invest a portion of their personal net worth in one or
more of the Funds.
Different Fee Schedules: James Alpha’s Management Fee and the General Partner's
Incentive Allocation could be discounted or waived with respect to any investor for any
particular period of time at the sole discretion of James Alpha or the General Partner, as
applicable. This discounted rate or waiver is not available to all or even most investors in
the Funds.
Termination: An investor can withdraw all or any part of its investment from any of the
Funds as set forth in the applicable Fund’s offering documents. James Alpha or the
General Partner, as applicable, can consider in its sole discretion, waive or modify any of
the terms of withdrawals for certain investors who are relatives, employees or affiliates of
James Alpha or the General Partner or its Principals, or for certain large or strategic
investors as well as in any other case.
Investors in each Private Fund should refer to the appropriate Fund's organizational and
offering documents for complete information regarding withdrawals of investments.
The agreement between James Alpha and any Fund can be cancelled only as provided
by the terms of its limited partnership agreement or similar governing documents.
Other Fees and Expenses: While it is not anticipated that mutual funds will be included in
the fund portfolios, money market mutual funds can be used to 'sweep' unused cash
balances until they can be appropriately invested. Investors should recognize that all fees
paid to James Alpha for investment advisory services are separate and distinct from the
fees and expenses charged by mutual funds to their shareholders. These fees and
expenses are described in each fund's prospectus. These fees will generally include a
management fee, other fund expenses, and a possible distribution fee.
In addition to fees paid to our firm or the General Partner, as appropriate, investors will also
be responsible for the fees and expenses charged by custodians and imposed by any broker
dealer with which James Alpha effects transactions for the Private Funds. Please refer to
Item 12 of this brochure for additional information regarding brokerage.
As disclosed at Item 4 of this Brochure, we can, as deemed appropriate, invest in
partnership interests which can include other hedge funds, private equity funds or
interests of other private partnerships managed by third parties. Under these
circumstances, investors will incur at least two layers of fees with respect to the portion of
his/her capital account invested in such partnership: James Alphas’ management fee
(and any performance based compensation paid to the General Partner), as well as the
management fee and/or a performance-based compensation charged by the partnership
in which the Fund invests. This layering of fees is incorporated in the net income or loss
of the Fund, is not easily apparent to investors and will lower the investor’s overall return.
Side Letters: Neither our firm nor the General Partner(s) of our Private Funds have
entered into any formal side letter agreements. James Alpha or the General Partner may
waive or modify the terms of investment for certain large or strategic investors, in side
letters or otherwise, including but not necessarily limited to, a waiver or lowering of
Management Fees, a waiver or lowering of the Incentive Allocation, providing preferential
redemption rights, agreeing to “Key Man” event provisions or granting “Most Favored
Nation” status and/or increased transparency or reporting.
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