ForexFunds.com is an educational site about the foreign-exchange markets, with a focus on Forex managed-account programs and Forex hedge funds. The information here is for educational purposes only. It is not a solicitation, an offer, a recommendation, or investment advice. It does not assess whether any product, manager, or allocation is suitable for a particular investor.
How a managed account works
In a typical managed account, the account is opened in the investor’s own name, and a money manager is authorized to trade it. This is often arranged through a limited power of attorney (LPOA). A trading-only LPOA allows the manager to trade without giving them authority to deposit or withdraw money. The actual agreement sets the permissions and the process for revoking them, so investors should read its terms rather than assume every LPOA works the same way.
Rules for brokers and managers vary by jurisdiction. Investors should check directly with the relevant authority to confirm whether a broker or manager is registered or regulated, by whom, and for which activities. In the United States, the NFA’s Forex regulatory guide explains the registration framework.
Some brokers provide trading platforms and back-office services for professional FX managers. Arrangements differ, and a manager may work only with certain brokers. For a hypothetical example, a manager who trades only through one broker cannot manage an account that must stay with another. Before funding an account, investors should confirm what reports they will receive, such as profit-and-loss statements or end-of-day reports.
Evaluating performance and risk
Past performance is just one part of due diligence, not a forecast. Even a long, steady track record does not guarantee future results. Monitoring an investment includes comparing past and current results, asking the manager about changes, and considering possible causes, such as market volatility or geopolitical events. If results differ from expectations, an investor may review the allocation, ideally with help from a qualified professional. The CFTC’s guidance on understanding contractual obligations also explains the limits of past performance.
When studying Forex funds, investors often consider correlation and diversification. Whether to allocate any money to a strategy, and how much, is an individual decision. Trading foreign exchange carries a substantial risk of loss and is not suitable for everyone. The CFTC’s Forex trading advisory explains risks involving leverage, dealers, and withdrawals.
Further reading
The articles here cover these topics in more detail, including correlation, the Sharpe ratio, how to review track records, and the differences between hedge funds and managed accounts. Begin with the educational articles listed on the blog page.