diff --git a/src/FourSixTwoSixAgg.sol b/src/FourSixTwoSixAgg.sol
index daff6e86..adc22130 100644
--- a/src/FourSixTwoSixAgg.sol
+++ b/src/FourSixTwoSixAgg.sol
@@ -104,7 +104,7 @@ contract FourSixTwoSixAgg is IFourSixTwoSixAgg, BalanceForwarder, EVCUtil, ERC46
     event ReorderWithdrawalQueue(uint8 index1, uint8 index2);
     event AddStrategy(address indexed strategy, uint256 allocationPoints);
     event RemoveStrategy(address indexed _strategy);
-    event AccruePerformanceFee(address indexed feeRecipient, uint256 performanceFee, uint256 yield, uint256 feeShares);
+    event AccruePerformanceFee(address indexed feeRecipient, uint256 yield, uint256 feeAssets);
     event SetStrategyCap(address indexed strategy, uint256 cap);
     event Rebalance(address indexed strategy, uint256 _amountToRebalance, bool _isDeposit);
 
@@ -609,10 +609,15 @@ contract FourSixTwoSixAgg is IFourSixTwoSixAgg, BalanceForwarder, EVCUtil, ERC46
         } else if (underlyingBalance > strategyAllocatedAmount) {
             // There's yield!
             uint256 yield = underlyingBalance - strategyAllocatedAmount;
+            uint120 accruedPerformanceFee = _accruePerformanceFee(_strategy, yield);
+
+            if (accruedPerformanceFee > 0) {
+                underlyingBalance -= accruedPerformanceFee;
+                yield -= accruedPerformanceFee;
+            }
+
             strategies[_strategy].allocated = uint120(underlyingBalance);
             totalAllocated += yield;
-
-            _accruePerformanceFee(yield);
         } else {
             uint256 loss = strategyAllocatedAmount - underlyingBalance;
 
@@ -632,19 +637,22 @@ contract FourSixTwoSixAgg is IFourSixTwoSixAgg, BalanceForwarder, EVCUtil, ERC46
         emit Harvest(_strategy, underlyingBalance, strategyAllocatedAmount);
     }
 
-    function _accruePerformanceFee(uint256 _yield) internal {
+    function _accruePerformanceFee(address _strategy, uint256 _yield) internal returns (uint120) {
         address cachedFeeRecipient = feeRecipient;
         uint256 cachedPerformanceFee = performanceFee;
 
-        if (cachedFeeRecipient == address(0) || cachedPerformanceFee == 0) return;
+        if (cachedFeeRecipient == address(0) || cachedPerformanceFee == 0) return 0;
 
         // `feeAssets` will be rounded down to 0 if `yield * performanceFee < 1e18`.
         uint256 feeAssets = Math.mulDiv(_yield, cachedPerformanceFee, 1e18, Math.Rounding.Down);
-        uint256 feeShares = _convertToShares(feeAssets, Math.Rounding.Down);
 
-        if (feeShares != 0) _mint(cachedFeeRecipient, feeShares);
+        if (feeAssets > 0) {
+            IERC4626(_strategy).withdraw(feeAssets, cachedFeeRecipient, address(this));
+        }
+
+        emit AccruePerformanceFee(cachedFeeRecipient, _yield, feeAssets);
 
-        emit AccruePerformanceFee(cachedFeeRecipient, cachedPerformanceFee, _yield, feeShares);
+        return feeAssets.toUint120();
     }
 
     /// @dev Override _afterTokenTransfer hook to call IBalanceTracker.balanceTrackerHook()
diff --git a/test/e2e/PerformanceFeeE2ETest.t.sol b/test/e2e/PerformanceFeeE2ETest.t.sol
index f8cec8a9..f72e6eb8 100644
--- a/test/e2e/PerformanceFeeE2ETest.t.sol
+++ b/test/e2e/PerformanceFeeE2ETest.t.sol
@@ -102,13 +102,20 @@ contract PerformanceFeeE2ETest is FourSixTwoSixAggBase {
         }
 
         uint256 expectedPerformanceFee = yield * fourSixTwoSixAgg.performanceFee() / 1e18;
-        uint256 expectedPerformanceFeeShares = fourSixTwoSixAgg.convertToShares(expectedPerformanceFee);
+
+        FourSixTwoSixAgg.Strategy memory strategyBeforeHarvest = fourSixTwoSixAgg.getStrategy(address(eTST));
+        uint256 totalAllocatedBefore = fourSixTwoSixAgg.totalAllocated();
 
         // harvest
         vm.prank(user1);
         fourSixTwoSixAgg.harvest(address(eTST));
 
-        assertEq(fourSixTwoSixAgg.balanceOf(feeRecipient), expectedPerformanceFeeShares);
+        assertEq(assetTST.balanceOf(feeRecipient), expectedPerformanceFee);
+        assertEq(
+            fourSixTwoSixAgg.getStrategy(address(eTST)).allocated,
+            strategyBeforeHarvest.allocated + yield - expectedPerformanceFee
+        );
+        assertEq(fourSixTwoSixAgg.totalAllocated(), totalAllocatedBefore + yield - expectedPerformanceFee);
 
         // full withdraw, will have to withdraw from strategy as cash reserve is not enough
         {