A: In case of partial withdrawals, the advance fee will be refunded on a pro-rata basis (from the date of withdrawal to the account anniversary) only if the withdrawn amount is part of the original capital on which the fee was charged.
Example 1: If the client initially invested ₹10,00,000 and the portfolio grows to ₹25,00,000, and the client withdraws ₹15,00,000, no fee refund will be initiated as the withdrawals is fully from gains on which fee was not collected — the advisory fee was charged only on the initial ₹10,00,000.
Example 2: If the client initially invested ₹10,00,000 and the portfolio grows to ₹25,00,000, and then withdraws ₹20,00,000, this withdrawal includes ₹15,00,000 of gains and ₹5,00,000 of original capital.
Since the advisory fee was charged only on the ₹10,00,000 initial capital, and ₹5,00,000 of that capital is being withdrawn, a pro-rata fee refund will be applicable on that ₹5,00,000 capital portion — for the period from the withdrawal date to the account anniversary. This ensures the client enjoys the full benefit of portfolio appreciation while being refunded fairly on the capital component that is no longer invested.
Note: If any part of the original capital (₹10,00,000) is withdrawn, that portion will be eligible for a pro-rata fee refund from the date of withdrawal till the account anniversary.
Here is the explanation presented in a table format for better clarity:
Scenario | | Portfolio Value at Withdrawal
| Withdrawal Amount | Capital Withdrawn | Gains Withdrawn | Fee Refund Applicable? | Explanation |
Example 1 | ₹ 10,00,000 | ₹ 25,00,000 | ₹ 15,00,000 | ₹ 0 | ₹ 15,00,000 | No | Entire withdrawal is from gains. Since fee was only charged on the original ₹10,00,000, and none of it is withdrawn, no refund is applicable. |
Example 2 | ₹ 10,00,000 | ₹ 25,00,000 | ₹ 20,00,000 | ₹ 5,00,000 | ₹ 15,00,000 | | ₹5,00,000 of original capital withdrawn. Pro-rata fee refund applies on this portion, from withdrawal date to account anniversary. |
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