When investing through a Portfolio Manager (PM) or a Strategy Provider (SP), it is crucial to have a solid grasp of the distinctions between a strategy and a fund. In this article, we will go in-depth into these topics:
What’s a strategy?
In a strategy, the Strategy Provider deposits their own capital into the trading account and executes trades with it. The trades are copied to each investment using a copy coefficient.
What’s a fund?
In a fund, all Investors’ money is pooled into one account. The Portfolio Manager trades from this account using invested capital. Orders are allocated to each investment by equity share.
Strategy vs Fund
The core differences between strategy and fund at a glance:
| Strategy | Fund |
| Strategy Providers use their own personal capital to trade. | Portfolio Managers use invested capital provided by investments within the fund to trade. |
| When investments are opened or closed, the available capital for trading is unaffected. | When investments are opened or closed in this fund, they affect available capital for trading. Namely, investments opened will increase available capital while investments closed decrease available capital. |
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Orders made by the Strategy Provider are copied by using the copy coefficient which is calculated by dividing investment equity by the strategy’s equity and then later used to calculate order size. Copy coefficient is calculated for each order as: Copy coefficient = investment equity / (Strategy Provider’s trading account equity + sum (open orders spread cost)) Read about copy coefficient for an in-depth look at this formula. |
Orders made by the PM are allocated to investment proportionally by equity share, calculated as investment equity divided by the sum of all investments. Share is calculated for each order as: Share = investment equity / sum of all investment equity in a fund Read about investment equity share to understand how orders are allocated. |
| Read here for an example of how a strategy works. | Read here for an example of how a fund works. |
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When an investor closes their investment, the Strategy Provider’s orders are unaffected. |
When an investment is closed (either by the investor manually or by stop out), the PM’s order may be subject to partial closing. Follow the link for an example of how partial closing may occur. |
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An Investor can close an investment within a few minutes. The investment will be stopped at the last market price. Please note, that if you have open orders where the market for the used symbol is closed, and there are less than 3 hours before the market opens, it is not possible to close the investment. |
Investors who want to close their investment need to send a request to the PM who will manually close the investment. If there is no action taken by the PM within 36 hours after the stop request is sent, the system will automatically close the investment. Do note that if there are open orders, and the market is closed, the investment cannot be stopped until the market reopens. The investment will be stopped at the last market price. |
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Please read about monitoring and closing investments, and about opening or closing investments when the market is closed for more information. |
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The billing period covers a calendar month, and ends on the last Friday of the month (23:50 UTC+0 to 23:59:59 UTC +0), reopening again immediately after. Investor’s trades are automatically closed and reopened based on the copy coefficient with zero spread. Please read about billing periods for more information on this topic. If the investment is profitable, the performance fee is deducted at this time. |
The billing period covers a calendar month, and ends on the last Friday of the month (23:50 UTC+0 to 23:59:59 UTC +0), reopening again immediately after. The investor’s trades are not closed at all during the billing period closure, and the PM’s orders are therefore unaffected. If the investment is profitable, the performance fee is deducted at this time. |
| Learn more about billing periods. | |
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The minimum trading volume per order in an investment is 0.00000001. |
The minimum trading volume per order in an investment is 0.0001. Do note investments may get more or less volume due to the rounding up of the second decimal point. |
| The maximum total equity is USD 200 000; this amount is the total sum of all equity managed in the strategy, including both the Strategy Provider’s and investors’ equity. | Total equity is unlimited. |
| There is no limitation on the number of investments under one strategy. | The maximum permissible number of active investments under one fund is 200. |
| The minimum amount needed by a Strategy Provider to create a strategy is USD 400. | There is no minimum amount needed by the Portfolio Manager to create a fund. |
| Social Pro is the available account type. | Pro is the available account type. |
Trading available on:
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Trading available on:
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The maximum leverage settings available include: 1:50, 1:100, 1:200 |
The maximum leverage settings available include: 1:2, 1:50, 1:100, 1:200. |
You can read up in detail and find working examples of each type by clicking the links to our articles below:
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