Managed Forex Investment is an investment class that is normally only available to High Net Worth individuals as the regulatory authorities feel that they are too risky for the average investor to invest in. Welcome to the world of managed forex.
With the financial markets in turmoil and people looking for ways to increase their income and returns on their capital, you may have noticed the increase in the number of adverts promoting becoming a Private Forex Trader. The advert normally goes something like this Earn 100k from home working a few hours a day and become financially free.
Well there is certainly truth that with trading you can escape the rat race and become independent, but what the fine print fails to mention is that fewer than 10% become successful traders. These courses are trying to sell the pickaxes for the next Gold rush.
If like me the thought of spending hours hunched over a computer fills you with dread, or that you don’t have the time because you have a full time job and can’t give up the next 12 months to see if you can become successful, this option would not be for you.
There is however another way! Private Members Managed Forex funds, where your capital is invested in a fund and professional forex traders trade the account on your behalf.
These funds come in two different forms, regulated and unregulated. The main reason I believe that a fund is unregulated is that it is run from an offshore location and the funds are co-mingled, in that individual investor’s funds are not separated from all other investor’s funds.
The regulated funds though are only available to high net worth individuals who are introduced through Financial Advisers who only act for High Net Worth Individuals, normally those with an income of over 100k or a net worth of at least a million.
Having undertaken research into Managed Forex Funds I have found a couple of funds that are promoted as Regulated with the appropriate financial authority.
Regulated Funds Fund 1: This fund requires a minimum investment of 25,000 and is only available to high net worth individuals or certified sophisticated investors. To add to that there is an 8% introduction fee to the financial adviser and they also receive 50% of the return once you have achieved 12% in the year. Does that seem expensive to you? Well on the face of it yes, but if I told you the target return was 5% per month then it doesn’t look so bad.
The problem with fund though was that the performance history of this fund showed a significant number of losses and only in the last 3 months had the risk management been sorted out to minimize the potential losses of investor’s capital.
To me this fund was expensive on the fees, leaving the investor to take all the risk whilst the advisors make a great commission on your funds. Sounds like the banking and hedge fund industry to me. I would not invest.
Fund 2: This is another fund which requires a minimum investment of 25,000 to get involved. There is also an introduction fee which is payable to the financial adviser that recommends this fund. Again this is a regulated fund with the appropriate financial authority. The target return of this fund is again 5% which is achieved using contracts for difference or CFD’s for short.
When I asked the Financial adviser about this fund he was not able to provide me with a trading history and so I decided 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 man in the street out of them and also appear to provide very good returns to the financial advisers who recommend them whilst leaving all the risk with the investors.
Unregulated Funds Unregulated funds mean that they are not registered with a Financial Authority and normally operate out of an offshore location. I also believe they are unregulated as all investors funds are co mingled into one trading account. This normally is frowned upon by the financial authorities.
Fund 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 a joiners fee of 10.
Once you had paid your membership fee you could choose the amount you wanted to invest. The amount you earned on your funds was between 6% & 10% per month depending upon your level of investment.
I had to say I was very skeptical about this fund and decided to watch a couple of friends invest in this. After about 6 months and them earning their 10% per month I thought it was time to try for myself. I invested some money and earned the 10% per month for the 4 months I was involved. Why only 4 months when you were earning such a good return? I hear you ask. Well the company went for FSA authorisation and the FSA told the fund to close down.
My friends were in the fund for about 12 months and easily doubled their money and were fully paid out.
My view is that I am still unsure about whether this was a legitimate investment or a Ponzi scheme. Myself and my two close friends got back all the funds they invested, but it did take a bit of time in my two friends cases. I am aware that some people who invested are still waiting for the return of their funds. For me the Jury is still out on this one, even though I made 40% in 4 months.
Fund 4: This is another Private Investment fund which is by invitation only. This fund proposes a 6% a month payout and the contract term is 3 months, which can be rolled over at the end of the period. I am currently watching this fund as I have close friends who are invested in this fund.
Fund 5: This is another Private Investment Fund which is by invitation only. This is another unregulated fund and requires an introduction from 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 was started in January 2005 and has achieved an average monthly return of 3.58%. Put it another way it has achieved a compounded return of 1515% since then. The minimum investment is only 2,000 euros which makes it much more accessible to the average person.
Trading strategy 2 was started in January 2007 and has achieved an average monthly return 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 don’t invest in it.
To be a member of this Private members Investment club requires a payment of 249 euros and the club takes 2% of the initial sum invested and 3% of the sum withdrawn. Compared to the regulated options above this I feel is a fair deal.
I have been invested in this fund for about 18 months and have achieved a return of about 40% over that period.
Summary Many savvy investors are placing their investment funds in Managed Forex Investment funds for returns that are significantly higher than that achieved through traditional sources. Most of the Financial Authorities prevent the average investors from investing in these funds through setting high entrance investment amounts of 25,000 or prevent financial advisers telling you about them if you are not a High Net Worth Individual.
To access these high return funds means the average investor must go to the unregulated market. In the unregulated market the minimum investment amounts are much lower but also there is a potential risk of loss, if you don’t invest with a company that has high integrity and many happy investors. Even though they are unregulated, there is a lot of social proof that some investors are making 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 or 20 times those you can get at the bank. They are higher risk, but the returns are higher. At the end of the day you decide what level of risk you are comfortable in taking.