Investor request performance fee: how to pick the right rate

The investor request performance fee is one percentage field on the form, and it directly shapes your net return. The default is 50%, but that number is a starting point for negotiation, not a rule. Offering 50% means you are saying: half of net new profit above the previous peak goes to the manager, half stays with me. Choosing that number deliberately is the difference between attracting professional managers and receiving low-quality proposals.

What the investor request performance fee actually buys

A performance fee pays for results, not access. A manager asking for 50% must be able to show a stable record that justifies the share; a manager offering 20% may be running a lower-risk strategy or seeking a larger allocation. In practice the rate signals three things: the manager’s expertise, the level of service provided (reporting, reviews, responsiveness) and the risk the manager is willing to carry. A lower rate is not automatically a better deal — it often filters in inexperienced managers.

The TARAZ three-way split: where the platform share comes from

Whatever rate you register becomes the basis of three fixed TARAZ equations:

• Investor net share = 100% minus the total performance fee
• Manager net share = total performance fee minus PAMM Iran’s share
• PAMM Iran share = deducted from within the fee, never added on top

So if you set 50% and the platform share is 10%, every $1,000 of net new profit above the previous peak pays $500 to you, $400 to the manager and $100 to the platform. The platform share is never charged on top of your cost; it comes out of the fee you already agreed.

Which rate is reasonable for you?

Three mistakes when setting the rate

1. Offering 10% to attract a good manager: professionals price their time against risk; a low rate attracts managers with no verifiable record.
2. Raising the fee without raising risk limits: no manager can manufacture extra return without extra risk; a high fee paired with a very tight drawdown cap is an inconsistent mandate.
3. Ignoring the high-water mark: if you accept a fee without the HWM rule, you may pay again just to recover a previous loss. Read performance fee and high-water mark.

Frequently asked questions

Can I change the suggested fee after publishing?

Yes, while the request is open and has not expired. Frequent changes, however, signal a missing framework; calculate the number with a scenario before publishing.

Is the fee the same across proprietary methods?

No. Each method and each account can carry its own rate. Your request states your suggested rate, and managers may counter-propose.

When is the performance fee paid?

In the four proprietary methods, at scheduled maturities and only on net profit above the previous peak. The mechanics are in TARAZ explained.

Is a separate management fee added on top?

Under TARAZ all cost components are consolidated in the total performance fee, and no separate charge outside that framework is imposed on the investor.

The bottom line

The suggested performance fee is your price for management quality. Set it from your risk tolerance, horizon and the record you expect — not from habit. For the full calculation, read investor rights in TARAZ.