Introduction
Managed Forex investing is an investment class that is typically only available to high net worth individuals as they are deemed too risky by regulatory authorities for the average investor to invest in. Welcome to the world of managed forex.
With financial markets in crisis and people looking for ways to increase their income and return on capital, you may have noticed the increase in the number of ads promoting becoming a private Forex trader. The ad is usually something like this. Earn 100k from home working a few hours a day and be financially free.
Well, it is certainly true that with trading you can escape the rat race and become independent, but what the fine print doesn’t mention is that less than 10% become successful traders. These courses are trying to sell the spikes for the next gold rush.
If, like me, the thought of spending hours hunched over in front of a computer fills you with dread, or that you don’t have time because you have a full-time job and can’t give up the next 12 months to see if you can be successful. , this option would not be for you.
However, there is another way! Forex funds managed by private members, where your capital is invested in a fund and the account is operated by professional forex traders on your behalf.
These funds come in two different forms, regulated and unregulated. The main reason I believe a fund is unregulated is that it is managed from an overseas location and the funds are blended, in the sense that individual investors’ funds are not separate from all other funds in the investors.
However, regulated funds are only available to high net worth individuals presenting through financial advisers who only act for high net worth individuals, typically those with an income of more than 100k or a net worth of at least one million.
After having done some research on managed Forex funds, I found a couple of funds that are touted as regulated with the appropriate financial authority.
Regulated funds Background 1: This fund requires a minimum investment of 25,000 and is only available to high net worth individuals or certified sophisticated investors. Also, there is an 8% filing fee for the financial advisor and they also get 50% of the refund once you have reached 12% in the year. Does that sound expensive to you? Well, at first glance, yes, but if I told you that the target return was 5% per month, then it doesn’t look too bad.
However, the problem with the fund was that the performance history of this fund showed a significant number of losses and only in the last 3 months had risk management been resolved to minimize the potential capital losses of the investor.
For me, this fund was expensive in fees, leaving the investor to bear all the risk while the advisors earned a large commission on their funds. Sounds like the banking and hedge fund industry to me. I would not invest.
Background 2: This is another fund that requires a minimum investment of 25,000 to participate. There is also an introductory fee that is paid to the financial advisor who recommends this fund. Again, this is a regulated fund with the appropriate financial authority. The target return for this fund is again 5%, which is achieved using contracts for difference or CFDs for short.
When I asked the financial advisor about this fund, he was unable to provide me with a trading history, so I decided that this fund was not for me.
What I have noticed at this point is that these regulated funds seem to want to keep the average guy out of them and also seem to provide very good returns to the financial advisers who recommend them, leaving all risk up to investors.
Unregulated funds Unregulated funds mean that they are not registered with a financial authority and normally operate from a foreign location. I also believe that they are unregulated as all investor funds are combined into a single trading account. This is usually frowned upon by financial authorities.
Background 3: This was an invitation-only private investment fund, which was only available by invitation from existing members. It was unregulated and required you to pay an assembly fee of 10.
Once you have paid your membership fee, you will be able to choose the amount you want to invest. The amount he earned with his funds was between 6% and 10% per month, depending on his investment level.
I must say that I was very skeptical about this fund and decided to watch a couple of friends invest in it. After about 6 months and they were earning 10% per month, I thought it was time to give it a try for myself. I invested some money and earned 10% per month during the 4 months that I was involved. Why only 4 months when it was performing so well? I hear you ask. Well, the company applied for the authorization of the FSA and the FSA told the fund to close.
My friends were in the fund for about 12 months and they easily doubled their money and got paid in full.
My opinion is that I am still not sure if it was a legitimate investment or a Ponzi scheme. My two close friends and I got back all the funds they invested, but in the cases of my two friends it took a little time. I am aware that some people who invested are still waiting for their funds to be returned. For me, the jury is still out on this, even though I won 40% in 4 months.
Background 4: This is another private investment fund that is by invitation only. This fund offers a 6% monthly payment and the contract term is 3 months, which can be renewed at the end of the period. I am currently looking at this fund because I have close friends who are invested in this fund.
Background 5: This is another Private Investment Fund that is by invitation only. This is another unregulated fund and requires the presentation of an existing member.
The difference between this fund and fund 3 is that it is much more transparent and has three different trading strategies with monthly performance figures to back it up.
Trading strategy 1 started in January 2005 and has achieved an average monthly profitability of 3.58%. In other words, it has achieved a 1515% compound return since then. The minimum investment is only 2,000 euros which makes it much more accessible for the average person.
Commercial strategy 2 started in January 2007 and has achieved an average monthly profitability of 4.57%. Since January 2007 it has achieved a compound return of 1003%. The minimum investment in this fund is also 2,000 euros.
Trading Strategy 3 is a much higher risk strategy that has suffered more volatility in terms of monthly returns than the other two, and I do not invest in it.
To be a member of this Private Members Investment Club, a payment of 249 euros is required and the club takes 2% of the initial amount invested and 3% of the amount withdrawn. Compared to the regulated options above, I think it’s a fair deal.
I have invested in this fund for approximately 18 months and have achieved a return of approximately 40% during that period.
Summary Many savvy investors are placing their mutual funds in Forex managed mutual funds for significantly higher returns than those achieved through traditional sources. Most Financial Authorities prevent average investors from investing in these funds by setting high upfront investment amounts of 25,000 or preventing financial advisers from informing you about them if you are not a high net worth person.
To access these high-yield funds, the average investor must turn to the unregulated market. In the unregulated market, the minimum investment amounts are much lower, but there is also a potential risk of loss if you do not invest in a company that has great integrity and many happy investors. Even though they are not regulated, there is plenty of social proof that some investors are getting incredible returns on their funds if you know where to look.
I hope this has opened your eyes to the secret world of Managed Forex Investment and how you too can gain access to returns that are 10 to 20 times greater than what you can get at the bank. They are riskier, but the returns are higher. At the end of the day, you decide what level of risk you are comfortable taking.