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This is the discount you get based on the performance of your investments.
Here’s the formula by which this discount gets applied:
$$ PD=[(100/z)-5] $$
where -
z = post-fee XIRR [your portfolio’s annualized return AFTER subtracting our fees] for the current month.
Max limit to PD is 15%.
The table below explains all cases -
| XIRR [post-fee] | % Performance Discount |
|---|---|
| < 5% | 15% |
| 5% | 15% |
| 6.66% | 10% |
| 10% | 5% |
| 12% | 3.33% |
| 15% | 1.7% |
| 20% | 0% |
| > 20% | 0% |
Variation of PD with z
So basically it’s our performance which is at play here - if we do a bad job, you get more discount. This pushes us to be on our toes, while gives you another reason to stick with us.
The money you save with this discount - you can invest that back, growing your corpus more.
Still need more clarity? Go through this example.