Investment Performance Fees and Shareholder Equalization

Posted on April 18, 2012 by tuncalik

Shortly defined, shareholder equalization is an umbrella term for all methods used to ensure fair share of performance fees for each investor (shareholder) in a fund. As mentioned in my previous related article, performance fee calculation with a general High Watermark (HWM) is quite simple and straightforward if there are no inter-period subscriptions or redemptions. But if there are inter-period cashflows, the calculation becomes more complex and some fairness concerns arise like the claw-back or free-rider syndromes that I will explain shortly. You will also see that these syndromes are actually side effects of a crude assumption, namely general HWM for all shareholders, that are tried to be corrected with some complicated adjustment methods like contingent redemption, equalization factor etc. Continue reading →

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Simple Performance Fee calculation model in Action

Posted on April 13, 2012 by tuncalik

Following video shows the Simple Performance Fee calculation model that was introduced in a previous article in action.

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General Framework for Rule Based Calculations

Posted on April 9, 2012 by tuncalik

Abstract model of a rule based calculation frameworkThis is a broad and interesting topic with huge potential, seen both from the technical and business perspectives. A general broad-scope calculation framework can have applications in countless subject areas from financial planning to simulation of global warming in science, saving hundreds and thousands of hours invested in hard code programming which often creates non-manageable complexity. A rule based calculation framework is in a sense a high level analytical programming language to organize and simplify complex mathematical relationships. Configuration rules are the syntax, mathematical models of function blocks are the buildings stones of this language. This article is a general introduction. I plan to write more about calculation frameworks in my future related articles. Continue reading →

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Quantifiable Value of Information in Direct Marketing

Posted on March 31, 2012 by tuncalik

A beautiful angelfish, Pterophyllum scalareWe humans are all amateur psychologist and skilled mind readers because we are obsessed about strategic information. The most strategic information is “what do others think about me”. You can surely remember many critical situations in your own life in which you desperately wanted to know what certain people think about you. In partner selection, in job selection, in many negotiation situations… Maybe you dreamed about being a mind reader in the literal sense. Note that mind guessing becomes most critical in cases where you want to make someone an offer, or you need to take a critical decision among several offers made by others to you. Some biologists say that the obsession for mind reading was one of the primary forces in evolution for the unusual development of human brain in a relatively short time in geological terms. Continue reading →

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