Fees and Compensation
Compensation for Advisory Services
Platinum is compensated for the advisory services provided to clients from two different types of fees:
• Management Fee – calculated based upon the current market value of a Client Portfolio at the time
of calculation (which may be daily, monthly or quarterly).
• Performance Fee – a fee that is calculated at the end of each financial year (30 June) or other date
(as agreed) and is based upon a Client Portfolio’s investment return over and above a specified
benchmark. Should the actual performance be lower than the applicable benchmark, then no
performance fee would be payable from the Client Portfolio for the relevant period.
Each Client Portfolio has differing fees and terms as determined by the investment management
agreement. These fees are negotiated at the time the investment management agreement is established.
Payment of Fees
Management fees are generally invoiced and payable either monthly or quarterly in arrears. Most Client
Portfolios prescribe the calculation methodology of the fee payable to Platinum and this is checked for
reasonableness to Platinum’s own records. Client Portfolios are invoiced for fees incurred and Platinum
does not deduct fees directly from client assets.
Other Types of Fees and Expenses
All Client Portfolio accounts incur brokerage and other transaction costs which are charged directly
against client assets, where applicable. Brokerage costs are discussed further on page 15 of this
Brochure.
Clients may incur audit expenses, taxes, bank charges, expenses related to the research,due diligence
and monitoring of actual and prospective investments, including legal and tax advice, operational
expenses, organisational and reorganizational expenses, and, with respect to new funds, formation
expenses.
Custodians (generally banks and broker-dealers) will be used to provide custodial and/or administrative
services in connection with the management of client assets. The cost of these services is not included in
the management fees discussed above.
Payment of Fees in Advance
Platinum does not invoice clients in advance for management fees.
Compensation for the Sale of Securities or Other Investment Products
Neither Platinum nor its employees receive commissions or service fees for the sale of securities or other
investment products that may be recommended or chosen for a Client Portfolio.
Performance-Based Fees and Side-By-Side Management
Performance-based compensation is defined as compensation based on a share of capital gains upon, or
the capital appreciation of, the assets or any portion of a client’s assets under management. Platinum
and its investment personnel manage both Client Portfolios and Funds that are charged performance-
based fees and Funds that are charged an asset-based fee (which is a non-performance based fee).
Under Section 205(a)(1) of the Investment Advisers Act, an investment adviser generally may not enter
into an advisory contract if the contract provides for the adviser to be compensated based on capital
gains or capital appreciation in the Client's Portfolio (i.e. a performance fee). Rule 205-3 of the Advisers
Act provides a conditional exemption from the general prohibition on performance fees for certain clients
who are financially sophisticated, or who have the resources to obtain sophisticated financial advice (e.g.
institutional clients). Platinum complies with the exemptions under Rule 205-3 and clients entering into an
investment mandate meet the definition of a “qualified client”.
Accordingly, performance fees are received from Client Portfolios. In addition, Platinum may receive a
performance fee based upon the amount by which a Fund’s return exceeds its hurdle return. For clients,
the terms of performance-based fees are negotiated with each client and such terms may vary. They are
assessed in arrears on an annual basis (calendar year, financial year or on anniversary of the investment
management agreement). For more information on how performance fees are calculated, clients should
refer to their investment advisory agreement.
Side-by-Side Management
“Side-by-side management” refers to Platinum’s simultaneous management of multiple types of clients
and Funds. Our clients have different investment objectives, policies, strategies, limitations and
restrictions. Side-by-side management may give rise to a variety of potential and actual conflicts of
interest for Platinum, Platinum’s employees and its supervised persons. As a general matter, Platinum
may have conflicts in allocating our time and services amongst clients.
Conflicts of Interest
The risk of a conflict of interest could potentially increase if Platinum has a financial incentive to favour
one client or Fund over another. For example, Platinum’s portfolio managers, traders or analysts who are
paid in respect of the performance of their portfolios, may have incentives to take higher investment risks
than the Client Portfolio desires.
Platinum could be subject to a conflict of interest because varying compensation arrangements among
the Client Portfolios and Funds could incentivize Platinum to manage one or more differently to other
accounts. In fact, some of Platinum’s accounts differ in certain ways with respect to compensation
arrangements, including with regard to fees and performance fee hurdle requirements. These and other
differences could make an account less profitable to Platinum compared to other accounts.
This risk is mitigated by:
• Platinum’s Investment Methodology as applied to derive prospects for investment.
• Portfolio managers and associated investment staff are required to comply with company policies
and compliance frameworks. This includes mandate monitoring (ensuring that trades and a Client
Portfolio’s invested position are consistent with the individual mandate).