> For the complete documentation index, see [llms.txt](https://doc.knightrade.io/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://doc.knightrade.io/features/vault-trading/fee-structure-in-knightrade/management-fee.md).

# Management Fee

The management fee is a fixed fee charged by vault traders for overseeing and managing the vault's assets. It is typically expressed as a percentage of the total assets under management (AUM) and is charged regardless of vault's performance.

#### Key Characteristics: 

Purpose: Covers the cost of day-to-day operations, research, and administrative functions carried out by vault traders. 

#### Calculation: 

The fee is calculated as a fixed percentage of the vault's AUM.

Example: 

If the management fee is 2% per cycle and the vault’s AUM is $1,000,000, the fee would be: 2% × $1,000,000 = $20,000 per cycle

`Management Fee = AUM * Management Rate`

#### Benefits for Investors: 

Ensures that vault traders are compensated for their ongoing effort and expertise. This is predictable and transparent, as it is not tied to vault performance.