There are costs to fractionalize large, institutional investments and to deliver these fractionalized investments at scale to the public in $2,500 minimum increments. As a result, Bluerock has established a commission structure and management fee structure associated with distributing Bluerock’s financial products to the public efficiently and within regulatory guardrails established by FINRA and other securities licensing agencies. A description of these costs is below, and is summarized as follows:
- 5.75% sales commission added to share price, one-time. Payable to Bluerock, shared with Broker-Dealers.
- 1.50% (Total Income+ Real Estate Fund) or 1.25% (High Income Institutional Credit Fund) recurring annual management fee. Payable to Bluerock.
- 0.25% recurring annual shareholder servicing fee. Payable to Bluerock, shared with Broker-Dealers.
- $3 per month Alture Funds platform access and maintenance fee. Payable to Alture Funds.
Bluerock Sales Commission. Bluerock sells its investment fund shares through licensed Broker-Dealers (BD’s) and licensed Registered Investment Advisors (RIA’s). The licensing requirements for BD’s and RIA’s help to ensure that the sales processes are consistent and follow regulatory guidelines.
For shares sold through BD’s, which include shares sold over the Alture Funds platform, Bluerock adds a commission of 5.75% to the then-current Net Asset Value (NAV) per share. Investors thus pay a share price calculated as NAV per share divided by (1-5.75%). For example, if NAV per share was $20.00, then the share price charged to investors would be $20.00/(1-5.75%) or $21.22. (There are lower commissions for investments over $100,000, with investments exceeding $1,000,000 paying no commissions. See each fund’s Prospectus or speak with an Alture Funds representative for details).
Bluerock allocates up to 5.00% of the 5.75% sales commission to BD’s, including Nortlov Securities, LLC, the third-party BD that assists Alture Funds with the sale of Bluerock fund shares over the Alture Funds platform. Nortlov in turn allocates a portion of the 5.00% sales commission to FINRA-licensed BD registered representatives on Alture Funds’ staff.
Here is an example of how these one-time, front-end Bluerock fees would work:
Assume that you purchase $10,000 worth of Bluerock High Income Institutional Credit Fund and at the time of your purchase, NAV per share is $20 and the annual distribution is 12%, payable quarterly. You elect to reinvest these distributions to purchase additional shares.
The one-time Bluerock fees would be added to the $20.00 share price, and you would pay $21.22 per share. Thus, your $10,000 would purchase 471.25 shares ($10,000 divided by $21.22). Your client account statement would reflect an account value of 471.25 shares times $20 per share, or $9,425.
If NAV remains $20.00, and if the annual distribution (paid quarterly) remains 12%, and if you reinvested your quarterly distributions, at the end of one year you would own 530.40 shares. These shares, at $20.00 per share, would be worth $10,608.
Under the same calculation methodology, at the end of the second year, you would own 596.97 shares worth $11,939 and at the end of the third year, 671.89 shares worth $13,438.
Bluerock Management Fee
Bluerock is entitled to a monthly management fee payable in arrears at the annual rate of 1.50% (Bluerock Total Income+ Real Estate Fund) and 1.25% (Bluerock High Income Institutional Credit Fund) of the average value of each Fund’s daily net assets during the prior month. Bluerock may elect to defer or waive its management fees to keep overall Fund expenses within certain limitations, as is more fully described in each Fund’s Prospectus. For Bluerock High Income Institutional Credit Fund only, Bluerock is also entitled to an incentive fee that is more fully described in the Prospectus, and which to date has been waived.
Bluerock Shareholder Servicing Fee
Bluerock is entitled to a monthly shareholder servicing fee payable in arrears at the annual rate of 0.25% of the average value of each Fund’s daily net assets during the prior month. Bluerock may share this fee with BD’s whose clients are investors in Bluerock’s Funds, including Nortlov Securities, LLC, and Nortlov in turn may share this fee with FINRA-licensed BD registered representatives on Alture Funds’ staff.
Alture Funds Platform Fee
Alture Funds charges investors a platform access and maintenance fee of $3 per month. This fee is charged to your linked bank account or credit card account.
