ITEM 5 – FEES AND COMPENSATION
NCA LLC charges a management fee based on assets under management. This fee is payable
quarterly in arrears. If a client relationship terminates during the quarter, NCA LLC only
bills the client for the time assets were under management. Below are NCA’s basic fee
schedules for the investment strategies that it manages. Fee schedules and minimum
balances are individually negotiated in certain circumstances. For accounts that have less
than $25 million, the management fee may be higher than the stated schedules.
Short –Duration Plus, Core Bond and US TIPS Strategies
.35 of 1% (.0035) per annum on the first $50,000,000
.25 of 1% (.0025) per annum on the next $50,000,000
.20 of 1% (.0020) per annum on the next $50,000,000
.15 of 1% (.0015) per annum on the balance
Multi-Asset Real Return Strategy
.85 of 1% (.0085) per annum
Global Inflation Linked Strategy
.40 of 1% (.0040) per annum on the first $25,000,000
.30 of 1% (.0030) per annum on the next $75,000,000
.25 of 1% (.0025) per annum on the next $100,000,000
.20 of 1% (.0020) per annum on the next $100,000,000
15 of 1% (.0015) per annum on the balance
There is a minimum annual fee of $100,000
US Small Cap Equity Strategy
0.80% (0.0100) per annum on the first $10,000,000
.75 of 1% (.0075) per annum on the next $40,000,000
.65 of 1% (.0065) per annum on the next $50,000,000
.50 of 1% (.0050) per annum on the balance over $100,000,000
NCA LLC remits a quarterly invoice to the client or client representative and typically does
not directly deduct management fees from its client’s accounts. In the case of individual
investors in the US Small Cap Equity Strategy, management fees may be deducted directly
from their investment account.
In addition to NCA LLC’s investment management fee, clients pay brokerage and other
transaction costs (as described in Item 12 –Brokerage Practices). Clients also pay charges
to financial institutions and other third parties such as custodial fees, charges imposed
directly by a mutual fund or exchange traded fund held in the account, 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. NCA LLC
encourages clients to obtain a complete schedule of these fees from their service provider
before entering into any engagement. NCA LLC does not receive any portion of these other
fees.
In a wrap fee program, the sponsor charges its clients a bundled asset-based fee for a
package of investment services, such as brokerage, advisory, research, custody and
management services. The sponsor is responsible for paying New Century Advisors, LLC’s
portion of the bundled fee for its investment management services. The fee New Century
Advisors, LLC earns is negotiated separately with each sponsor and may vary from
program to program. Further, the fees clients pay to the sponsor vary and New Century
Advisors, LLC does not have any control or influence over the fees charged to clients by the
sponsor.
Fees for managing wrap fee accounts are charged to the client by the wrap program
sponsor as part of a bundled fee. New Century Advisors, LLC receives a portion of the
bundled fee for investment management services directly from the wrap program sponsor.
Fees are based on a percentage of the account’s market value and may differ from New
Century Advisors, LLC standard fee. On wrap accounts that the custodian bills,
contributions, withdrawals and refunds on New Century Advisors, LLC’s fees are
determined by sponsor rules.
Clients may incur separate custodian, brokerage and transaction costs. Custodian fees are
negotiated by the clients and their selected custodian(s).
New Century Advisors, LLC participation in wrap fee or similar programs may require
acceptance of account sizes less than the generally preferred minimum. Account minimums
may be subject to negotiation.
Model Delivery Portfolios
In these portfolios, clients generally pay an asset-based fee to the Sponsor Firm; out of that
fee, the Sponsor Firm is responsible for paying an investment advisory fee to NCA.
NCA’s advisory fees are charged quarterly or monthly in arrears, depending on the Sponsor
Firm. Fees paid in arrears are based on a client’s assets under management at the end of
the quarterly or monthly, depending on the Sponsor Firm. These fees are typically
deducted by the Sponsor Firm directly from a client’s account. In some cases, negotiation of
fees will result in different fees being charged for similar services and may be less than the
stated fee schedule. Because NCA’s fee is asset-based, NCA’s advisory fee will increase if the
market value of the client’s account increases. NCA will not be compensated on the basis of
a share of capital gains or capital appreciation of client accounts. When NCA applies an
asset-based fee to an account’s assets, the fee may be applied to all assets in the account,
including but not limited to: cash, cash equivalents.
If you have any questions, NCA’s Compliance Officer, Thomas Hines, is available to
address any questions that a client or prospective client may have regarding the
above.