Item 5 – Fees and Compensation
The Adviser receives compensation for its services as follows:
Direct Advisory
Where the Adviser has a direct advisory relationship with a client (a “Direct Client
Relationship” or “Direct Advisory”), the Adviser typically charges a management fee
based on the value of the client’s assets under the Adviser’s management.
Depending on the strategy employed, the management fee may generally range from
0.00% to 1.25% per annum of such value. The specific manner in which management
fees are charged by the Adviser is established in a client’s written agreement with the
Adviser. All management fees are negotiable based on such factors as the account
size, the relative complexity of servicing the account and legal and other restrictions
applicable to the account. These negotiations can be undertaken between the
Adviser and its clients and/or clients’ representatives.
The Adviser generally charges its management fees on a quarterly basis either in
advance or arrears. A client can elect to pay the Adviser directly or also may authorize
the Adviser to directly debit fees from his or her account. Accounts initiated during a
calendar quarter will be charged a prorated management fee. In the event
management fees are charged in advance and the client terminates the advisory
relationship with the Adviser prior to the end of a quarter (which the client may do at
any time without penalty upon written notice to the Adviser), the Adviser will refund to
the client a pro rata portion of the fee paid for that quarter. In the event management
fees are charged in arrears and the client terminates the advisory relationship prior to
the end of a quarter, the Adviser will charge management fees on a pro rata basis for
the portion of the quarter during which services were rendered to the client.
The Adviser’s management fees do not include brokerage commissions, transaction
fees and other related costs and expenses, which shall be incurred directly by the
client. Clients may incur certain charges imposed by custodians, broker-dealers, and
other third parties, such as custodial fees, 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. Client accounts may invest
in mutual funds and exchange traded funds that also charge management fees. Client
assets may be held in cash or cash equivalents, including in money market funds that
Form ADV Part 2A
charge certain fees and expenses. The expenses, fees and commissions described
in this paragraph are in addition to the fees payable by clients to the Adviser, and the
Adviser shall not receive any portion of these charges. These aforementioned
charges, when combined with the Adviser’s management fees, may exceed what a
client might pay if it invested with the Adviser through a wrap fee program (see below).
Clients should carefully review all transaction charges.
Sub-Advisory
The Adviser will periodically enter into agreements with other investment advisers or
financial institutions whereby the Adviser does not have a Direct Client Relationship
(each, a “Sub- Advisory Agreement” or “Sub-Advisory”). Terms, conditions, and fees
are stated in the pertinent Sub-Advisory Agreement. Fees are negotiated and paid to
the Adviser by the other investment adviser or financial institution party to the Sub-
Advisory Agreement. The other adviser or financial institution shall provide its client
with full disclosure of the Sub-Advisory arrangement.
Certain Sub-Advisory Agreements are with “wrap fee” programs sponsored by other
financial institutions (each, a “Wrap Sponsor”), under which the client pays the Wrap
Sponsor a specified annual fee to cover all costs, including securities transaction
costs, investment management services, custody and other account-related services
in connection with the client’s account (each, a “Wrap Fee”). The Adviser’s
management fees are a portion of the total Wrap Fee charged by the Wrap Sponsor,
who compensates the Adviser directly. The overall costs of a Wrap Fee program to
a particular client may be higher or lower than the client otherwise would experience
if it were managed as a Direct Client Relationship or under a Sub-Advisory Agreement
in which the fees were not “wrapped”, and such determination would primarily depend
on the number and frequency of portfolio transactions undertaken in the account
during the period. For information regarding the fees payable by clients to Wrap
Sponsors of the programs in which the Adviser participates (as well as information
regarding the portion of those Wrap Fees that a Wrap Sponsor pays the Adviser),
clients should review the disclosure documents prepared by the Wrap Sponsors and
delivered to clients in accordance with SEC rules.
The investment management services provided by the Adviser under these Sub-
Advisory programs do not differ materially from the investment management services
provided by the Adviser to clients with which it has a Direct Client Relationship except
for responsibility of performance reporting, management fee billing, and, in certain
instances, executing trades on the account owner’s behalf (i.e. Model Delivery).
Hedge Funds
The Adviser receives the following two fees from its management of the Hedge Funds:
• Management Fee. Investors in the Hedge Funds are generally charged a
management fee, on a quarterly basis, of between 0.25% and 0.50% of the
month-end net asset value of the investor’s capital account, prorated for any
partial period. The Adviser, in its sole discretion, may reduce or waive the
management fee with respect to employees of the Adviser and certain affiliates
Form ADV Part 2A
and reserves the right to apply different management fee arrangements to
investors on an individual basis.
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