Fees and Compensation
Description of Investment Management Fees
Legato’s fees are established on a client-by-client basis and set forth in each client’s investment management
agreement or applicable fund’s governing documents. Legato generally charges a fee based on a percentage of a
client’s assets under management (“asset-based fees”). Legato’s fees are typically inclusive of the sub-advisers’
fees.
Legato also receives flat fees for advisory services.
Legato’s stated annual fees are as follows:
Asset Class Annual Fee
Small Cap 0.80% on the first $50 million, 0.75% for the next $50 million, 0.70% for the next $100
million and negotiable thereafter
Large Cap 0.60% for the first $100 million, 0.55% for the next $100 million, 0.50% for the next $100
million and negotiable thereafter
All Cap 0.65% for the first $100 million, 0.60% for the next $100 million, 0.55% for the next $100
million, and negotiable thereafter
SMID Cap 0.70% for the first $100 million, 0.65% for the next $100 million, 0.60% for the next $100
million and negotiable thereafter
Micro Cap 1.15% for the first $50 million, 1.10% for the next $50 million, 1.05% for the next $100
million and negotiable thereafter
International 0.75% for the first $50 million, 0.70% for the next $50 million, 0.65% for the next $100
All Cap million and negotiable thereafter
Global 0.75% for the first $100 million, 0.70% for the next $100 million and negotiable
Opportunities thereafter
International 0.85% on the first $50 million, 0.80% for the next $50 million, 0.75% for the next $100
Small Cap million and negotiable thereafter
Emerging 0.80% for the first $100 million, 0.75% for the next $100 million, 0.70% for the next $100
Markets million and negotiable thereafter
All fees are subject to negotiation and a client’s fee can differ from the above stated fee. A number of factors are
considered in establishing a fee schedule, such as type of mandate, size of the portfolio, complexity of the
relationship or strategy, and prior contractual commitments.
Fee Billing
Fees are payable quarterly, in arrears. Legato does not require or solicit prepayment of fees.
Legato’s asset-based fees are calculated based on the market value of the assets, including interest, dividends,
and cash and cash equivalents as valued by an independent third party. In most cases, the independent third
party is the client’s custodian. When an account is opened after the beginning of a quarter, the market value of
the account at inception is used as a valuation, and the fee is prorated for that quarter. Similarly, when the
management for the account ends before the end of the quarter, the closing value of the termination date is one
of the valuations used and the fee is prorated. In the event the client terminates our services, the balance of any
earned, unpaid fees will be due and payable at the time the account is closed.
Legato’s fee schedule is typically inclusive of asset management fees for the sub-advisers. The majority of our
clients make a single quarterly fee payment to Legato, and we then compensate all underlying sub- advisers
directly. Legato does not typically deduct fees directly from a client’s account, but a client can select to have
Legato either deduct the advisory fee from the client’s account or bill the client for fees incurred.
Other Fees
Generally speaking, clients will incur certain charges imposed by banks and/or custodians. Such fees include, but
are not limited to, custodial fees, charges imposed directly by a mutual fund or exchange traded fund in the
account (which will be disclosed in the applicable fund's prospectus), wire transfer and electronic fund fees, and
other fees and taxes on brokerage accounts and securities transactions. Additionally, clients can incur brokerage
commissions and transaction fees. Such charges, fees and commissions are exclusive of and in addition to our
fee. Legato does not receive any portion of these commissions, fees or costs. Please refer to the “Brokerage
Practices” section for additional information.
Other Compensation
Legato does not accept compensation for the sale of securities or other investment products.
Performance-Based Fees & Side-by-Side
Management
The majority of the client accounts at Legato are charged asset-based fees. In some cases, Legato may have
clients that mandate performance-based fees (fees based on a share of capital gains in the market value assets)
be used for all their investment accounts, and Legato will typically accommodate such requests.
Legato may charge a performance-fee, as described below, for its services. To qualify for this type of fee
schedule, a client must be a “qualified client” as defined in Rule 205-3 of the Investment Advisers Act of 1940.
The annual performance-based fee will be determined by a client’s individual circumstances and will include
realized, and unrealized capital gains and losses in a client account during the measurement period. Clients will
be charged the performance fee in arrears at the end of each measurement period based upon the value
(market value or fair market value in the absence of market value), of the client’s account at the end of the
previous measurement period.
In some cases, this performance fee is subject to a “High Water Mark” therefore, the performance fee will be
paid by the client only when the aggregate net profit in the clients account for the current and all prior calendar
quarters exceeds the aggregate net loss of the account for the current and all prior calendar quarters.
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