Z-Indexes Fees and Incentives: How Success Fees Work

What are Zignaly Z-Indexes Fees?

Zignaly Z-Indexes use a success fee model. That means you don't pay fixed management fees just for being invested. A fee is charged only if your investment makes a profit. If there are no profits, there is no success fee to pay. This is different from traditional funds that charge ongoing management or subscription fees regardless of performance.

In practice, profits are shared between the investor and the wealth managers who run the strategies inside the Z-Indexes. All fee details, percentages, calculation rules, and conditions are clearly disclosed before you invest.

In summary

• You pay only when you profit (no fixed or upfront management fees)
• Fees are shared with the professionals managing the portfolios and Zignaly
• All fee rules are disclosed before investing

Who Gets Paid in Z-Indexes, and Why Does It Matter?

Z-Indexes are built around an investor-first incentive chain. Profits must exist before anyone earns a fee. This matters because it aligns everyone involved around the same outcome: sustainable performance rather than asset gathering.

For a broader explanation of the structure and incentive model, see Z-Indexes Basics.

Wealth managers are compensated through profit sharing, meaning they earn only after investors are in profit. The platform's role is to provide the infrastructure, reporting, and execution framework for the profit-sharing, not to charge fixed advisory fees.

When are Success Fees Charged in Z-Indexes?

Success fees are charged only when profits are generated. There is no upfront fee and no charge simply for holding a position. If performance is flat or negative, no success fee is triggered.

In this model, "profit" means gains above the previous reference level defined by the system (see High-Water Mark below). This ensures fees are tied to real, net performance rather than short-term fluctuations or deposits.

What is a High-Water Mark, and How Does it Protect Investors?

A high-water mark (HWM) is the highest value your investment has previously reached. Success fees are charged only on new profits above that level. If the portfolio experiences a drawdown, it must fully recover past losses before any new success fee can be applied.

Simple Example (illustrative):

• You invest 1,000 → high-water mark
• Portfolio rises to 1,100 → this becomes the high-water mark, success fees are paid to Zignaly and Wealth manager, and profits to the investor.
• Portfolio drops to 1,020 → no fees are charged
• Portfolio later rises back to 1,100 → still no fee
• Fees apply only on gains above 1,100
• Portfolio later rises to 1,300 → New fees are calculated.

This mechanism prevents "double charging" for the same performance.

For a deeper look at how preserving your high-water mark can reduce unnecessary fees, see The Cost Advantage of Z-Indexes: Keeping Your High Water Mark Intact.

Are Z-Indexes Fees "Lower" than Paying Multiple Strategy Fees Separately?

When comparing Z-Indexes to investing in many individual services, fee stacking can occur; each service may charge its own success fee, with different timing since there are different HWM for each service.

Z-Indexes bundle exposure into a single portfolio with one unified success-fee framework, which can simplify how fees are calculated and tracked.

What Should Investors Look for Before Allocating to Z-Indexes?

Before allocating to Z-Indexes, investors should review the key fee rules, risk disclosures, and reporting transparency, not just headline returns.

The following checklist outlines key considerations for investors to review before allocating capital.

Investor Checklist

• Clearly stated success fee percentage
• High-water mark definition and reset rules
• Transparent reporting and performance history
• Risk disclosures and methodology overview
• Fit with your time horizon and risk tolerance

Conclusion

Z-Indexes Fees and Incentives are designed to align investors, wealth managers, and the platform around one outcome: real, net performance. With no fixed management fees, success fees charged only when profits are generated, and a high-water mark that prevents double-charging, the model prioritizes transparency and investor protection.

For investors evaluating long-term, rules-based portfolios, understanding how these fees work is essential to assessing true costs, incentives, and alignment before allocating capital.

Disclaimer: Investing involves risk, including the possible loss of principal. Past performance is not indicative of future results. This does not constitute investment advice or a solicitation to invest. Availability of Z-Indexes may be subject to local laws and regulations. Users are responsible for ensuring compliance with their jurisdiction's requirements.