Booking of management fees
In addition to transaction fees, some brokers charge management fees, typically an annual percentage of the portfolio’s value. In such cases, the broker deducts these fees by selling a small portion of your shares, reducing the total number you own.
This is essentially a sell transaction followed by a fee transaction. These can be booked in a single transaction through an Outbound Delivery where the shares are sold and the fees are applied to the sold value within the same transaction. This results in a total outbound delivery amount of 0.
To accurately book those fees, it is important that your broker details the number of sold shares.
Note
This can be done in an Outbound Delivery and not in a Sell as Sell transaction in Portfolio Performance can not have a final null value.
🇫🇷 Practical use for French products
This is with this methodology that fees on securities in French assurances-vies can be booked.
Example
In this example, let's consider that 0.5671 shares of stock-A are owned through a broker applying an annual 0.75 % management fees, taken 4 times a year : 0.75 % / 4 = 0.1875 % fees applied each quarter, on December 19, March 18, June 17 and Septembre 18.
The first quaterly fees on stock-A consist in a sell of 0.75/100/4 * 0.5671 = 0.001 shares, whose sold value is taken as fees.
And again on March 18 :
0.75/100/4 * 0.5661 = 0.001 shares are sold by the broker and the sold value is taken as fees. Same for the other dates.
The Performance Chart illustrates the impact of these fees : compared to the price performance of stock-A, our stock-A performance is 0.75 % lower than its benchmark over a year.
Second method
This could also be done by separating the Sell and the Fee transactions by using:
- First a Sell transaction
- Second a Fees transaction on the cash account, related to the sold security.
but this creates two transactions and forces to use a cash account.
