While there is always a risk in trading generally, Portfolio Management does not force traders to follow any particular trading style or strategy.
Portfolio Managers (PM) can trade how they see fit; risk management is always recommended since their trading performance is given a trading reliability level (TRL) that Investors can look into. Apart from that, PMs should consider the following:
- Billing periods: Time periods used to calculate the performance of a fund. This may present an inflexible timeframe for traders to work under.
- Performance fee payouts: These commission incentives for traders only occur at the end of a billing period, so a payout schedule must be observed.
- Managing metrics: Return is a metric that a fund presents to its Investors; there is no option to hide this information from potential Investors.
- Drawdown: Accumulated losses eat into the performance fee, which can lower overall earnings; in other words, losses can hit capital a little harder.
- Untimely investments: Even if profitable, an Investor who invests late may not see the same profit as the PM, resulting in disappointment.
Considering these can mitigate the risks to your typical trading strategies for your funds. For Investors, we recommend reading about discovering a fund for more helpful data to consider before investing.