Yes, as a CTA and CPO you can trade both your CPO account(s) and separately managed accounts. That's what I do. At Interactive Brokers you can have a Financial Advisor (FA) account (owned by your management company) and client sub-accounts. Your pool account could be one of your client sub-accounts. You can make trades in individual client accounts, or you can trade in your FA account and allocate the trades to the sub-accounts. You cannot allocate profits, only trades. Trade allocation is done automatically according to a ratio you set up before you enter the trade. This is for compliance with NFA regulations to prevent cherry picking of profitable trades.
Great..thanks! The reason is if a CTA could allocate just profits is for a smaller account (which would make the CPO a better route), because for my % risk per trade, min. acct would need to be $250k to allocate on a trade basis. Lastly, from your experience, what has been the cost to run your CTA versus your CPO. My research suggest the CPO is more expensive to run. Thanks again Aaron!!
If you go back a few pages on this thread...there is some good feedback from usernamed "heech" regarding setup costs, recurring fees, etc... for running a CTA
so when CTA reports performance track ... he is reporting performance accros/average or combined of all individual accounts he manages? Is that right?
I'll even make it easy for the other poster... http://www.elitetrader.com/vb/showthread.php?s=&threadid=26648&perpage=6&pagenumber=24
I am currently managing two accounts. How do I report my performance? Say for example, in the beginning of the month Account1 = $200K Account2 = $100K At the end of the month after fee charged to the account, Account1 = $240K Account2 = $110K
I assume you would $50K profit divided by begining balance of $300K 50k/300k = 16.66% No? I had posted similiar question...seem to almost answering my question but need confirmed.
Thanks heech! Doesn't the fund also pay for your monthly expenses (does that come out of the management fee, or can the the fund pay it)? I have experience with Rothstein Kass and they are top notch. I am assuming it will cost $75k a year to run the CPO, they way you have it setup...about right?
All fund-specific expenses come out of the fund. The fund pays it, before management/incentive fees. So audit, tax, fund formation expenses... all comes from the fund. Your break-even analysis shows this number, so investors know what they're getting into. My expenses are $25k audit/tax, ~$20k admin a year... so slightly less than what you guessed! (I feel better already.)
Yes, correct. You'll also need to be able to compute your program's performance when there are additions or withdrawals mid-month, when you did not trade some accounts for the entire month, and (if you accept them) when you have notionally-funded accounts.