Heron Finance’s 1% Management Fee Explained

Heron Finance often gets mistaken for a credit fund. We are not a credit fund – we are an investment platform that builds diversified portfolios of private credit exposures for accredited investors. That is very different from investing in a credit fund, which typically (though not always) originates a single portfolio of deals. 

Users on Heron Finance can actually invest in exposure to multiple credit funds. And the investments are automated, meaning users don’t have to constantly rebalance their capital. Our system does that for you, according to your stated financial goals and risk tolerance. 

At Heron Finance, we only collect a flat 1% management fee – that is the only fee we charge users.  There are no other fees such as performance or incentive fees to use our platform.  Our management fees are wrapped fees, meaning the 1% fee is automatically deducted from your monthly or quarterly distributions to your account.

Some users might wonder what our 1% fee covers. In this article, we’ll dive into our management fee and explore the services it supports. 

Key Highlights

• The Heron Finance management fee covers the expenses associated with building and rebalancing user portfolios and maintaining the technology and user interface. 
• Heron Finance’s management fee is higher than the management fee of some competing investment products–but our platform charges no carried interest, which makes our total expected returns higher than those of competitors.

What Does the Heron Finance Management Fee Cover? 

The most obvious answer here is the management of our platform. But that’s a bit too high-level. Let’s dive in the weeds to explore what exactly Heron Finance investors are getting for their 1% fee. 

• Fund selection: Our private credit team implements an ongoing credit review and monitoring process for third-party private credit funds. We leverage in-depth fundamental research and advanced technical analysis, resulting in each investment programmatically underwritten using our proprietary scoring models. This helps us ensure that only top-tier investments are selected and made available for our clients portfolios.
• Platform management: Heron Finance is built atop innovative technology, including the blockchain. A team of brilliant engineers works tirelessly to ensure that our platform’s functionality and user interface are seamless and intuitive. This includes everything from generating smart contracts for financial transactions, to facilitating deposits and withdrawals.
• Automatic Rebalancing: Heron Finance offers a ‘set it and forget it’ investment experience. Simply select a strategy and fund your account, and we’ll take care of the rest. That includes building you a diversified portfolio of private credit deals and automatically reinvesting the interest accrued on individual deals so users benefit from compounding interest. We also continuously monitor your portfolio as deal allocations change over time (thanks to said interest compounding), and periodically rebalance your portfolio according to your stated financial goals and risk tolerance. Please see our Wrap Fee Brochure for additional information. 

All of the above is covered in the 1% management fee. Toss in the operational expenses of running a business, and you can see the need for platforms like ours to charge a management fee.