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Portfolio Manager

Raiden
Feb 28 2012 at 18:01
posts 244
This is an interesting development in the retail forex business. I believe it is a first.

Alpari has launched, on 22nd Feb 2012, a “Portfolio” module in their new PAMM 5 system where you can create an account that allows you to allocate your funds into different PAMM 5 accounts, with its performance tracked on its own chart.

What’s special about this is that you are allowed to publish your portfolio in the Ratings List, AND other users can invest in it too!

You are effectively paid for your skills in selecting good PAMM accounts and allocating the funds in your portfolio in the right proportion to achieve the desired net yield-to-risk ratio. You do not need to even run a PAMM account of your own.

This is the complete Ratings List showing all accounts on the PAMM 5 Terminal till date.


This shows the Accounts that are Portfolio accounts.



This is effectively a “Fund of Funds” strategy. And while it is still in the early days, when the total PAMM 5 Accounts listing grows, the Portfolio option should prove to be a vibrant addition to the PAMM market.

Fichiers joints:

Consistency above all.
Paul Ng (paulng)
Feb 29 2012 at 16:35
posts 43
Indeed interesting.

Raiden, you're allowed to open a PAMM account with USD 300 only?

How do other people put money into the PAMM traders without Limited Power of Attorney, and how do the traders get paid, or the PAMM managers?

Thanks for the info.
"The first rule of forecasting should be that the unforeseen keeps making the future unforeseeable." - David McCasland (January 5,2012, Our Daily Bread)
Raiden
Feb 29 2012 at 20:41
posts 244
Hi Paul,

Yes. USD 300 (or approx. equivalent in EUR or RUR) is the minimum to open a PAMM account at Alpari NZ.

And although it might state that X amount as the 'Capital' on the PAMM5 Terminal(as you see above) or 'Manager's Capital' on the PAMM4 myAlpari page, the manager can have more funds riding in the account. This Manager's Capital is the amount that gets locked into the PAMM account for the duration of its lifespan and can only be released upon liquidation of the entire PAMM account. As such, there is little incentive to lock in additional funds further than the minimum required to have it opened.

That said, to have the account published on the PAMM4 Ratings list, the account must be a minimum of 6 months old and have a Manager's Capital of USD 3,000, giving some incentive for him to lock in this amount for its publication. As PAMM5 is newly launched only at the end of last year, I suppose they relaxed this condition to increase adoption to it. The list you see above is ALL the accounts on PAMM5 currently compared with the 1237 PAMM4 accounts now.

Regarding the Limited Power of Attorney, you have to read the 'PAMM-ACCOUNT' Regulations T&C's from Alpari, drawing attention to clauses 1 (General Provisions) and 10 (Obligations of the Manager, Investor and Manager's Partner). I hesitate to summarise legalese here.

Regarding the allocation of profits, it is stated in clause 9 (Calculations and Transfers on PAMM-Accounts and Managed Accounts).
For an FAQ on this, https://alpari-forex.com/en/help/pamm/ See General Questions, Item 4.
It is the same as the performance fee in most Funds. A good thing for investors is that since there is no sales charge, annual fee, redemption fee, etc. the expense ratio is 0, no profit no cost.
How a performance fee works is that a % is deducted from the profits earned and paid to the manager. The rest of the profits then get allocated accordingly to the holders in the same proportional of their holdings in the fund. E.g.

The total Fund has $10,000.
- The Manager holds $1,000.
- Investor 1 holds $4,000.
- Investor 2 holds $3,000.
- Investor 3 holds $2,000.
--The profit made is $1,000.
---The Manager's remuneration is 20%, $200
---The rest, $800, is allocated accordingly:
----Manager = $800 / $10,000 * $1,000 = $80
----Investor 1 = $800 / $10,000 * $4,000 = $320
----Investor 2 = $800 / $10,000 * $3,000 = $240
----Investor 3 = $800 / $10,000 * $2,000 = $160
Consistency above all.
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