Kothar believes very firmly in offering clients value for its services. With that motivation in mind, Kothar has done extensive research on standard industry fee payment structures and has come up with an attractive structure that rivals EVEN THE MOST COMPETITIVE industry fee rates.
The performance conditions of the fee structure that Kothar Capital offers its clients is as follows:
KOTHAR CAPITAL MANAGEMENT, INC. will be paid by the client 25% of the total annual pre-tax return exceeding the United States One Year Treasury Bill Yield as it stood on January 1st of the year, or, on the first day that KOTHAR CAPITAL MANAGEMENT, INC. begins managing the account. In the event the total annual pre-tax return of the portfolio is negative or does not exceed the United States One Year Treasury Bill Yield, the client will not have to compensate KOTHAR CAPITAL MANAGEMENT, INC. for services performed during the past year. The benchmark monetary value of the portfolio will be assessed on December 15th of the year, or on the first day that KOTHAR CAPITAL MANAGEMENT, INC. begins managing the account. All total annual pre-tax return calculations will be based upon the benchmark monetary value of the portfolio.
Feature: I have a substantial portion of my net worth in the ALCHEMY Investment Partnership and separately managed accounts.
Benefit to you: Unlike virtually all other types of managed funds, I will have an acute vested interest in the success of the funds we invest. A fund manager typically has no capital commitment in the fund they manage and draws a salary regardless of performance. Since I have my own personal money involved I have a strong interest to produce the highest returns possible for everybody.
In short, my personal, professional and financial interests are directly aligned with those of my partners.
Feature: A U.S. One - year treasury yield threshold
Benefit to you: This means that if the annual return of the Investment partnership vehicle or the clients' separately managed account does not exceed the United States One - Year Treasury Bill Yield , there shall be no fee charged to the investor-partners. A one-year treasury yield % threshold was chosen to represent a typical return from a risk-free investment.
If I do not beat a risk-free rate of return, I do not deserve to be compensated.
Feature: A fee is charged only if the return clears the threshold
Benefit to you: If the Investment partnership vehicle or the clients? separately managed account has a return that is greater than United States One - Year Treasury Bill Yield %, then the profits are split between the partners and myself in the ratio of 3:1.
For example, if the partnership has a 14% return and the United States One - Year Treasury Bill Yield % was 2%, I receive 3% (i.e. 25% x (14% - 2%)), and the partners receive 11% (i.e. 2% + (75% x (14% - 2%)).
In short, the first 2% are "free" and the remainder is split 3:1 in favour of the investor-partners. This is markedly different from a mutual fund which will charge you a fee irrespective of performance. Even in the event of negative performance they will subtract a hefty fee.
FEES WILL BE PAYABLE TO KOTHAR CAPITAL MANAGEMENT, INC. by the client within 30 days of the receipt of the fee invoice.