hedging fx managers

I recently had lunch with a client of mine and thought I'd share her thoughts with everyone (with her permission, of course). She related to me how she allocates part of her investment portfolio for speculating in the fx market. She used to be an active trader, but these days, instead of trading her own account, she simply looks over her accounts with different fx managers. This way, her risk/reward is not limited to one method--her own, but through a number of fx managers with different methods altogether.

Instead of trading her own account, she farms them out to different fx managers. She opens a managed account with different fx managers with the least minimum. At the end of each month she allocates/de-allocates funds from each fx manager depending on their performance. If manager A makes a 10% profit, she then adds 10% more funds to her account with that manager. If manager B lost 10%, she de-allocates 10% from that manager.

She has managed accounts with 9 different managers at the moment--4 are making money for her, which is more than enough to cover for the poor performance of the rest of the managers. According to her, it never gets to the point where any one single fx manager blows out her account with them. On the first month, she can tell if she needs to close out a managed account due to poor performance or if that were just a losing streak.

I did a quick check on this by going to http://www.fxmanagers.info/ and added all the monthly average returns from each manager, then divided the sum by the total number of managers. The averaged return from that list was -1.11%. In hindsight, if I were actively managing my funds with these fx managers, I'd probably get a better number than this by weeding out the losers and adding more funds to the winners.

This looks like an interesting strategy. Is anyone else doing this? Can you please post positive and negative feedback on this?

thanks!

- jim

Interesting way to do it, is that all she goes on, just bottom line monthly returns?

Dealing with fund managers and clients is not as easy as it sounds. Experienced investors and traders rarely make any sort of assessment on just one or two month's returns, overall performance over maybe 6 or 12 months is what counts assuming the trader isn't taking an unacceptable risk.

Putting pressure on a manager/trader to achieve a certain level of return per month is never a good idea, it's how we ended up in the mess we're in right now!

Personally if I was an investor I would be looking for quality rather than quantity, an acceptable risk for a comparable return and a relatively smooth equity curve, rather than looking at who can make the most money each month.

one sentence, it works, cut the loss, let profit run
two sentence, it's xaron's site why he trade himself?
three sentence, how to ensure a person is consistent
4th sentence, mng fund is not allowed here, your topic will be removed probably, hahahaha

Too much left-over Independence Day Punch?

Hey, yes it's my page. Thanks for mentioning it.

So why do I trade for myself? Because I just want to learn it and want to become successful. It took me years to get it finally.

The period of tracking time is still too short to say something. But obviously there are some real gems there, like this one:

http://fxmanagers.info/charts/equity_ace.png

Now that's an equity thing, mhh?

Or this one:

http://fxmanagers.info/charts/equity_fxhoy.png

So what now? Is this another thread which I'll find in the recycle bin? Looks like that every thread where I participate gets trashed lately.

lol i want managers to deal with few accounts...contact me with more complete details on [email protected]

Oh dear, ooops!

I'd like to see them recover from that, I'm getting vertigo just looking at it!

It's not funny as it's OPM but it's hard to keep a straight face!