Item 5 – Fees and Compensation
The Firm directly or indirectly charges clients (“Clients”) management fees which are a fixed
percentage of assets under management (“Management Fees”), and performance fees or allocations
which are a fixed percentage of profits realized by the Funds (or underlying Investors), after adjusting
for expenses and high-water marks (“Performance Fees”, and together with Management Fees, the
“Fees”).
Generally, Fees are charged in accordance with the schedule set forth in this Brochure. However, the
Firm is entitled to negotiate Fees with the underlying investors in the Funds (the “Investors”)
which may differ from the standard schedule, based on specific circumstances and on a case-by-case
basis. Examples of these circumstances include, without limitation, the relative size of an Investor’s
account, an Investor’s affiliation to the Firm, and/or an Investor’s status as a seed or strategic investor.
As such, Fees incurred by Investors may vary significantly.
Management Fee
Generally, the Firm charges a Management Fee of one percent (1%) of asset under management,
including with respect to any increase in assets under management attributable to the use of leverage.
Management Fees for the Private Funds are calculated and accrued monthly and payable quarterly (or
pro-rated periods therein) in advance. The Firm deducts Management Fees from investor accounts
on the first day of the calendar quarter. To the extent that any interest in a Private Fund is redeemed,
the Firm will promptly refund all fees paid in advance for periods with respect to that interest after
Ranger Alternative Management II, LP 2|Page
such applicable redemption date.
Performance Fee
Generally, the Firm charges a Performance Fee of up to ten percent (10%) of an Investor’s
allocable share of net profits for a fiscal year, as measured net of Management Fees, other expenses and
default reserves. Performance Fees are generally charged on a quarterly or annual basis. However,
Performance Fees are also charged at such time in which a partial or full withdrawal is affected by
the Funds, on the basis of net profits allocated to such limited partner through the final withdrawal
date.
Performance Fees for various Client accounts may be subject to a “high water mark” limitation.
Thus, after the first year in which a Performance Fee is earned, the Performance Fee for subsequent
years only applies to the extent that applicable investor’s net profits measured on a cumulative
basis, net of any losses, for all years exceeds the highest level of such cumulative net profits
achieved through the close of any prior year.
Management Fees and Performance Fee Exclusive of Expenses
Management Fees and the Performance Allocation are exclusive of expenses associated with
investments in the Funds. Although, the Firm is responsible for its general overhead expenses,
Investors bear the cost attributable to the Funds’ investment activities and operations, including
without limitation, expenses associated with trading or transaction costs, administration, accounting
and operations.
Fees are generally referenced at an annual rate, but are generally calculated and charged in advance on
a daily, monthly or quarterly basis. To the extent that an Investor redeems its investment, the Firm
will promptly refund all fees paid in advance for periods after such applicable redemption date.
Fees in Master Feeder Structure within Private Funds
The Firm currently employs a master-feeder structure between the Private Funds whereby the
Cayman Fund participates in the Firm’s portfolios through a limited partnership interest in the
Domestic Fund. Although such master-feeder structure provides for greater flexibility and
liquidity with respect to the Private Funds’ investment program, it may subject the Cayman Fund to
its pro rata portion of certain expenses of the Domestic Fund. Notwithstanding the above: (i) Investors
in the Cayman Fund will either be charged a Management Fee or Performance Allocation/Fee by the
Cayman Fund or as an expense of the Domestic Fund, but will not be charged such fees on a duplicate
basis, and (ii) the Firm has the right, at its sole discretion, to exempt or reduce the Cayman Fund’s
participation in any expenses of the Domestic Fund, to the extent it believes such exemption or
reduction to be equitable, including (without limitation) with respect to expenses associated with any
third party’s services to the Domestic Fund or the Domestic Fund’s audit.
Compensation to Third Parties
Please see Item 14 – Client Referrals and Other Compensation for information regarding
compensation received by or paid to affiliated and unaffiliated persons for the solicitation of
Investors for the Funds.
Ranger Alternative Management II, LP 3|Page