> ## Documentation Index
> Fetch the complete documentation index at: https://docs.redpotion.finance/llms.txt
> Use this file to discover all available pages before exploring further.

# Fees

> Red Potion funds can charge up to five fees. Every fee is paid in newly minted shares, never in your assets — the fund mints shares to the fee recipient, which slightly dilutes exi

Red Potion funds can charge up to five fees. Every fee is paid **in newly minted shares**, never in your assets — the fund mints shares to the fee recipient, which slightly dilutes existing holders. Fees are configured per fund by the [FeeManager](/developers/contract-reference/fee-manager), and all rates are expressed in basis points (bps), where 10,000 bps = 100%.

## The five fees

| Fee                 | When it accrues                                      | How it's calculated                                                                            | Paid to                |
| ------------------- | ---------------------------------------------------- | ---------------------------------------------------------------------------------------------- | ---------------------- |
| **Entry fee**       | Your deposit batch settles                           | A slice of the shares you'd otherwise receive is withheld: `totalShares × entryFeeBps / 10000` | Fund fee recipient     |
| **Exit fee**        | Your redemption batch settles                        | A slice of your redeemed shares: `redeemShares × exitFeeBps / 10000`; your payout uses the net | Fund fee recipient     |
| **Management fee**  | Each accepted report (time-based)                    | `totalSupply × managementFeeBps × elapsed / (10000 × 365 days)`                                | Fund fee recipient     |
| **Performance fee** | Each accepted report, only above the high-water mark | `totalSupply × (price − HWM) × performanceFeeBps / (price × 10000)`                            | Fund fee recipient     |
| **Protocol fee**    | Each accepted report (time-based)                    | Same shape as the management fee, at `protocolFeeBps`                                          | Protocol fee recipient |

## What "high-water mark" means

The **performance fee** only applies when the fund reaches a new peak share price. The fund tracks a **high-water mark (HWM)** — the highest price at which a performance fee has been charged. If the price rises above the HWM, the fee is charged on the gain and the HWM ratchets up to the new price. If the price is flat or below the HWM, no performance fee is charged. This means you're never charged a performance fee twice for recovering the same ground after a drawdown.

## The fee base asset

Management, performance, and protocol fees are time- and price-based, so they need a reference price. Each fund designates a **fee base asset**, and these three fees accrue against that asset's reported price. That's why the fund always includes the fee base asset in every settlement's price set.

## Where the protocol fee goes

The protocol fee is separate from the fund's own fees. Its recipient isn't stored on the fund — it's resolved live from the protocol root ([FundManagerDeployer](/developers/contract-reference/fund-manager-deployer)) at accrual time. This lets a protocol-wide change take effect across all funds by flipping one pointer. If the protocol fee recipient is unset (zero), the protocol fee is simply skipped.

## What this means for you

* **Entry and exit fees** are one-time, applied at settlement of the relevant batch.
* **Management and protocol fees** accrue continuously with time, realized at each report acceptance — so a longer holding period means more of these fees.
* **Performance fees** only bite when the fund makes new highs.
* Because all fees are paid by minting shares, your **share count doesn't drop**, but your **proportional ownership** of the fund gradually decreases as fees accrue. Each fund publishes its exact fee schedule; check it before depositing.