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An “Offer "is a list of conditions proposed by a PAMM Manager to his/her Investors in order for the latter to join the Manager’s PAMM account. It includes the Trading Interval, various fees to be paid by the Investor, and restrictions of balance operations.
PAMM Managers have the right to create, edit and delete Offers of their PAMM accounts. At the same time, an Offer can’t be modified by the PAMM Manager if at least one Investor is working with the PAMM account under their Offer.
PAMM Managers can create a limited number of Offers. A default offer is automatically created at the moment of a PAMM Manager’s registration. This offer doesn’t contain any fees so the manager should change it asap before he invites investors to join his/her PAMM account.
Offer parameters
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Name |
Description |
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Name |
The name of the Offer that will be visible to Investors |
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Active |
If this option is enabled, Investors will see the PAMMManager’s Offer among other offers, and they will also be able to choose to join and deposit in the manager’s PAMM account. Essentially, this option determines the public status of the PAMM Manager’s offer. Inactive Offers are not selectable by new Investors when joining a PAMM account but can still be joined privately via a Join Link. Existing investors will remain under a PAMM offer for as long as they choose, even if it has been deactivated (made private). |
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Description |
Some description of the Offer to be visible for Investors while they self-register under the Investment or as a part of statistical information in the Ratings Module. |
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Join Links |
| The list of custom or automatically generated links to join the Offer with. One Offer can have multiple links |
| Link (address) |
An auto-generated or custom key to be included in the link’s URL: http://<pamm-web-url>/app/join/<MMID>/<link-key> |
| Expiration | Sets the expiration date of the link. Links with no date specified are considered permanent. |
| One Time | The link can be used only once to join the Offer. |
Each PAMM offer consists of the following:
- Trading interval
- Minimum Deposit
- Minimum Withdrawal
- Minimum Initial Investment
Trading Interval is a period of time by the end of which investors pay Management and Performance fees to PAMM Managers. The first trading interval starts for an investor from the moment they place their first deposit request.
Pamm Managers can set different periods for Trading Intervals separately for each offer:
- Days
- Weeks
- Months
- Calendar Months
- On rollover
Min. Deposit A minimum deposit defines the lowest amount of money possible to be deposited as an Investment to the PAMM account. If empty, investors can deposit any amount of money.
Min. Withdrawal A minimum amount that can be withdrawn from the PAMM account at a time. Does not apply to cases of closing an investment.
Min. Initial Investment A minimum amount to be deposited to the PAMM account upon the Investment registration. Investment will be successfully registered even if the Min. Initial Investment value is lower than the Min. Deposit. If Min. Initial Investment is empty, the Min. Deposit is checked when creating an investment.
Fees
Fees may be enabled or disabled via PAMM account configurations. This means that each PAMM account may have different fees available to set up in the offer.
- Performance Fee: Equity-based or Return-based Performance Fee. Can be multi-level.
- Management Fee: Equity-based Management Fee. Can be multi-level
- Deposit Fee: Equity-based Deposit Fee. Can be multi-level.
- Withdrawal Fee : Equity-based Withdrawal Fee. Can be multi-level
Performance Fee Payment route: Investor → Money Manager (Trading account)
The Performance fee is part of the profit generated by the PAMM Manager from his pooled Investments during the current Trading Interval, which is paid to the latter either at the end of the Trading Interval or right after the Investor's withdrawal request (in case the requested withdrawal amount is greater than the total investor deposit amount).
In case of losses in the Investor’s account during the current Trading Interval, no Performance fee will be paid to the PAMM Manager. Such losses are transferred to the next trading interval, so the PAMM Manager must recover those losses in order to receive Performance fees at a later stage. The fee calculation is based on the High-Water Mark concept but applied to each Investment individually.
Investors can always see their current interval profit values in the Web Portal - this is the sum, from which the Performance Fees will be deducted.
Equity- and return-based Performance fee modes are available in the system. The fee model ONLY influences fee levels. Fees are still calculated from the trading interval's PROFIT regardless of the chosen mode.
There are two types of performance fees available in the system:
- Equity-based
- Return-based
Equity-based
Fees are calculated based on the Equity of the Investment account. Levels of equity/percentage pairs are defined as follows:
- The Equity value is the starting amount to calculate a particular Performance fee (The Equity value includes profit for the current trading interval).
- The Performance fee is the percentage of profit that will be transferred to the Money Manager
Below, see the example of setting Performance fee levels:
|
Equity (money) |
Performance fee (%) |
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$0.00 |
50 |
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$1,000.00 |
40 |
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$10,000.00 |
30 |
The above example shows that Investors with Equity up to $999.99 will pay 50% of profit as Performance fee, while those with Equity from $1,000.00 to $9,999.99 will pay 40% of profit as Performance fee and the rest of the Investors will pay 30% of profit as Performance fee.
Calculation example (according to the table above):
|
Equity at the end of the trading interval (profit included) |
Trading interval profit |
Performance fee transferred to Pamm Manager |
Equity after Performance fees are paid out |
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$3,500 |
$500 |
40%, i.e. $200 |
$3,300 |
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$600 |
$100 |
50%, i.e. $50 |
$550 |
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$35,000 |
$5,000 |
30%, i.e. $1,500 |
$33,500 |
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$90,000 |
-$10,000 |
0 |
$90,000 |
Return-based
At the end of the trading interval, the PAMM system will calculate the TWR (The Time-Weighted Rate of Return) for each Investor’s account and will pay out Performance fees in the following way:
- The TWR will be split into multiple levels according to Performance fee levels predefined in the Offer
- The profit will be split according to TWR levels
- The Performance fee will be calculated per each level
- Each level fees will be aggregated and transferred to the PAMM account of the MM
See the example of calculations below:
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TWR |
TWR Level |
Perf. fee (%) |
Abs. profit |
Absolute profit level |
Performance fee value |
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TWR, 35% |
30-35% |
50% |
Abs. Profit $7,000 |
* 5 / 35 = $1,000 |
* 50% = $500 |
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20-30% |
40% |
* 10 / 35 = $2,000 |
* 40% = $800 |
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10-20% |
20% |
* 10 / 35 = $2,000 |
* 20% = $400 |
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0-10% |
0% |
* 10 / 35 = $2,000 |
0 |
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Total: |
$1,700 |
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Management Fee Payment route: Investor → PAMM Manager (Trading account)
This is a flat fee paid by the Investor to the PAMM Manager based on the Investor’s Equity levels. It can be charged as a percentage of the Investor’s current equity or a monetary value, which is paid out to the PAMM Manager at the end of each trading interval. The Management fee’s value is always set per month depending on the chosen length of a trading interval. To calculate the fee for intervals of different lengths, the following formulas are used:
Percentage-based Management fee = Investment’s Equity * (Number of days in the Trading Interval / Mean month-length) * Management fee percentage
Fixed Management fee = Fixed fee value * (Number of days in the Trading Interval / Mean month-length)
Mean month-length is a constant value (30.44) which makes the fee’s calculation even for each month, regardless of the variable number of days indifferent months(e.g., February is 28 or 29 days, August is 31 days).
Example: a simple Management fee case
Management fee = 10%
Trading Interval = 1 calendar month (start 01-Jan, end 01-Feb - 31 days) Investment’s Equity = $1000
On the first rollover after the Trading Interval ends, the PAMM Manager will receive the Management fee from the pooled Investment. The fee value is calculated according to the following formula: $1000 * 31/30.44 * 0.1 = $101.83
Example: Management fee paid for a less than month period
Management fee = 10%
Trading Interval = 1 week
Investment’s Equity = $1000
The fee value is calculated according to the following formula: $1000 * 7/30.44 * 0.1 = $23
NOTE 1: The Management fee is also calculated for Investors who have left a PAMM Manager’s account in between Trading Intervals using the same formula.
NOTE 2: In case the Trading Interval selected is set ‘On Rollover’, the Management fee will be charged once per day on the first rollover of the day (for the amount set in the offer). Any consecutive rollovers within the day will not trigger another Management fee payout.
Pending Performance fees and Withdrawals
There maybe cases in which an Investor seeks to withdraw their funds in the middle of the trading interval. By that time, the PAMM Manager has already generated some profit for the Investor and expects a Performance fee to be paid out by the end of the interval. If the Investors were able to freely withdraw all o their funds, technically that would mean that they would also be withdrawing the performance fees they should have paid for free.
To avoid such situations, PAMM has a mechanism that is applied in case of pending performance fees:
- If an Investor withdraws only a part of their funds, and the full requested amount can be withdrawn, Performance fees are not paid out to the manager and are left in the investor’s account.
- If after a withdrawal, the remaining funds consist of due Performance fees only, the fees will be paid to the PAMM Manager immediately.
Example:
Funds = $10,000
Pending perf. fees = $3,000
- Investor tries to withdraw < $7,000; e.g. $6,000
- Investor withdraws the full requested amount, $6,000
- All the remaining funds 4,000 are left in the investor's account
- No performance fees paid out.
- Investor tries to withdraw >= $7,000
- MM receives $3,000 as performance fees
- Investor withdraws $7,000 to his owner account
- Investor account is left with 0 funds
Entry Fee Payment route: Investor → Pamm Manager
An Entry fee is a one-time payment for joining a PAMM Manager. This happens upon rollover, once the investment request is confirmed. If allowed by the Manager’s account configurations, any applicable entry fees can be specified by the PAMM Manager or Admin in their offers. Unlike other fees, an Entry fee doesn’t have a ladder-based amount input - it is a single, once-off fee applied to all investors upon depositing in the manager's offer. The value can be specified either as a fixed amount in PAMM Manager’s account base currency, or as a percentage of the investor’s initial investment, also converted into the PAMM Manager’s currency.
The Entry fee overrides the Deposit fee for the very first investment. So, even if the Deposit fee is larger than the Entry fee, the amount of the latter will still be charged. Any consequent deposits into a PAMM investment are taxed according to the Deposit fee settings, for example:
Offer settings: Min. Initial Investment: $1000 , Entry fee: $10 , Deposit fee: 10%
When an investor with an initial deposit of $2000 joins a Manager’s PAMM offer, the investor is charged with the $10 Entry fee (share after rollover: $1990),and not the Deposit fee. However, the Deposit fee will be charged on any later deposits. For example, if the investor decides to put another $2000 into the same PAMM pool, the share will increase only by $1800 this time. However, if the Entry fee hadn’t been specified, the investor would’ve paid two Deposit fees of $200 for each deposit.
Please note that the Min. Initial Investment cannot be lower than the Entry fee - in this case, an investor needs to initially invest at least the amount of the Entry fee
NOTE An interesting use case for the Entry fee would be to set it to $0, while also setting a desired Deposit fee. This way, as Entry fees override Deposit fees, new investors don’t have to pay either of them, so initial investments are essentially ‘cost-free’, which might motivate investors to deposit more money into a PAMM offer during their registration and initial deposit.
Deposit Fee Payment route: Investor → Money Manager
This is a fee paid to the PAMM Manager by Investors who deposit money in their PAMM account. Deposit fees are taken as a percentage of the deposit amount at the same rollover, during which this deposit is processed.
See the example of setting Deposit fee levels below:
|
Deposit amount (money) |
Deposit fee (%) |
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$0.00 |
2 |
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$2,000.00 |
1 |
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$20,000.00 |
0 |
This means charging2% commission for smaller deposits ($0-2000), charging1% for average deposits ($2,000 - 20,000), and charging no commission for large deposits ($20,000 - ∞).
Calculation example (according to the table above):
|
Deposit amount |
Deposit fee (transferred to Money Manager) |
Amount added to the Investment |
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$5,000 |
1% = $50 |
$4,950 |
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$500 |
2% = $10 |
$490 |
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$25,000 |
0 |
$25,000 |
Withdrawal Fee Payment route: Investor → Money Manager
This is a fee paid to the PAMM Manager by Investors who withdraw money from the PAMM account. Withdrawal fees are deducted as a part of the requested amount, the withdrawal fee size depends on the Investor’s equity, i.e., the money they can potentially withdraw if they were to close the Investment entirely.
|
Investor’s equity (money) |
Withdrawal fee (%) |
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$0.00 |
0.1 |
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$2,000.00 |
1 |
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$20,000.00 |
2 |
This means charging0.1% commission for withdrawals of smaller investors (who have invested $0-2000 part in the PAMM account), charging1% from withdrawals of average investors ($2,000 - 20,000), and charging2% from withdrawals of the biggest investors (who have invested $20,000 - ∞).
Calculation example (according to the table above):
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Withdrawal amount |
Withdrawal fee (transferred to Money Manager) |
Amount withdrawn from the Investment |
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$500 from a $1,000-investor |
0.1 = $0.50 |
$499.50 |
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$5,000 from a $12,000-investor |
1% = $50 |
$4,950 |
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$5,000 from a $50,000-investor |
2% = $100 |
$4,900 |