# Institutional Fee Structures & Performance Tracking

Fusion provides a programmable fee engine that automates the accounting, accrual, and distribution of management and performance fees, aligning incentives between allocators and managers.

## **Fee Types**

* **Management Fee (AUM-based):** An annualized fee calculated based on total AUM, accruing continuously (per block).
* The **Performance Fee** is a success-based fee on net profits, aligning incentives with absolute returns. Governed by a **High Watermark** (HWM), it's paid only when the current NAV exceeds its prior peak. Realized at set intervals based on settled onchain valuations, compensation reflects sustained growth. A rolling structure, which can be manual or time-based, allows the HWM to be reset.
* **Deposit & Redemption Fees:** Transactional fees that can be [**Socialized** ](https://app.gitbook.com/s/oaErR6oxxmjeJRJYOuXH/atomists/curating-a-fusion-vault/on-and-offboarding-contributions)(retained in the vault to benefit existing depositors) or **Administrative** (directed to a separate address, such as the vault owner, for operational costs).