Managed accounts are segregated accounts, owned by investors, but with the trading decision-making
function delegated to a fund manager. Managed accounts differ from mutual funds as in a mutual fund,
contributions from traders are pooled together in a corpus, which is managed by the fund manager:
the trader holds a portion of the portfolio and has no practical ownership of the underlying securities.
Two of the major modes in which managed accounts operate are Percentage Allocation Money Management (PAMM) and Multi- Account Manager (MAM).
PAMM and MAM both allow fund managers to manage multiple segregated accounts through a single account, without the need to create a trading fund. Client managed accounts are all connected to the manager’s main account and all trades made by the manager are distributed proportionally among account holders.
Similarly, the gains or losses arising out of a fund manager’s performance get proportionally distributed
among the segregated account holders.
To ensure the security of investors funds, client deposits remain in their own trading accounts, the manager does not have access to these accounts and therefore cannot make any withdrawals. The individual investors are the only ones who are able to make deposits & withdrawals to/from these managed accounts. However, the performance fees that are earned by account managers are automatically withdrawn from clients' accounts, in accordance with the terms of the contract.
** Being fully computerised and automated, the PAMM platform reduces the risk of fraud in the distribution
Multi-Account Manager (MAM)
MAM accounts provide more complex and sophisticated managed account services by allowing the fund manager to assign higher leverage for particular sub-accounts. MAM also allows the fund manager to regulate and adjust other risk management features across sub-accounts based on the individual trader’s risk profiles, thereby giving them the flexibility to execute complex trading strategies. Although the basis of distribution continues to be a percentage allocation, by using a MAM, the fund manager can take advantage of greater flexibility to allocate trades on the basis of risk allowed by each sub-account. If a particular sub-account holder is considered by the manager to have a higher risk appetite, then they can assign greater leverage for the account, thereby increasing the risk of individual trades. If the higher risks pay off, there could be greater rewards. However, this flexibility could be a double edged sword and could bring exceptional losses if markets go against the fund manager but the good news is that Vertex Investment negative balance prevents initial investments.
** Allows better representation of individual trader’s risk appetite in fund manager’s trading strategy.
** Regulated brokers providing PAMM/MAM services.
Managed accounts have allowed traders to benefit from sophisticated trading strategies provided by professional fund managers for their individual accounts. They also allow traders to harness the benefits of diversification based of varied trading strategies. These instruments provide an alternative to traditional pooled asset trading funds.
Vertex Investment trades and investments employs the services of professional traders and use of algorithms
with an interesting system of risk management and its negative balance system protects loss of
investors initial capital.
If you don’t have enough knowledge to trade on the financial market or if you don’t have enough time for it, choose a PAMM account and invest your funds. Your potential profit is unrestricted and you can track the progress on your account using your smart-phone or pc and withdraw your funds anytime. Click the sign up button and get a PAMM account today!
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