7.12 Computation of Trailing Fees

This topic explains about computation of trailing fees.

The computation of trailing fees depends upon the method of calculation that is specified for the trailing fee load. The fee can be calculated either using the Average Holdings approach or the Quarterly Average Holdings approach.

The method of computation also depends upon the entity for whom the fee is payable (i.e., the From Entity). The From Entity could be the fund, the AMC or the unit holder.

The two approaches are explained below. Let us suppose that the trailing fee has been set up with the following slabs:

Table 7-16 Computation of Trailing Fees

From Amount	To amount	Return Value (%age)
0	10000	1.25%
10000	30000	2.50%
30000	And above	3.50%

Quarterly Average Holdings approach (when the From entity is the fund or the AMC)

In this approach, instead of considering the value of holdings on each day leading up to the processing date, the balances as on every quarter are considered for calculating the average, on the processing date.

Average Holdings approach (when the From entity is the unit holder)

In this approach, the holdings held by each unit holder associated with the broker for whom the fee is being calculated are summed up for each day till the day of processing is reached, and the average value is taken on that date.