Forex Articles - Advantages of the Forex funds before the classic Forex managed accounts

When the international markets became more accessible even for the small time unprofessional investors, a variety of investment products offered by companies, funds and banks began to appear.

The managed account services offer every investor the chance to participate in the currency exchange market even without having the necessary knowledge and skills. The process begins when the investor opens a personal or corporate account with broker A with a certain amount and gives this account to a specific institution for management. This institution then negotiates with the investor the levels of return, the risk involved, the structure of the portfolio, the period of investment, commission for managing the account, etc. There are tons of companies offering managed account services.

A few years ago, a new and alternative product of the Forex managed account called Forex Funds or Forex Pools was introduced to the investment markets. This product gives investors an opportunity to participate on the currency markets without having the needed skills, experience, and qualifications. Small time investors can also benefit from these collective investment plans with amounts as low as $50 (in some companies). Now let's compare these two investment opportunities:

- Forex funds have a low minimum investment requirement and are suitable for small time investors to participate. Forex managed accounts usually have a minimum investment amounts of tens of thousands of dollars.

- The managers of the Forex Funds have more flexible trading capabilities because they are managing millions or even billions of dollars in the Forex pool. The managers of the Forex managed accounts have limited trading capabilities and strategies because they are managing a lot less money. That's why for the same level of risk, Forex funds can bring better returns than the Forex managed accounts.

- The strategy of investing with Forex funds often affects the prices of the certain currency pair. If the company managing the fund is big, its trading directly affects the market and thus the company can maximize the profits and the returns of the fund.

- Another important difference between Forex managed accounts and Forex funds is the worth of the fees and commissions that the investor pays. The companies offering Forex managed accounts often have flat monthly or yearly fees for company expenses and in addition, they get a commission which is a percent of the returns they make for the investor (usually 20-30%). Forex funds, on the other hand, have significantly lower operating expenses because they are managing all investments as one, not separately for every investor. Also because they manage larger amounts of money, they can charge smaller commissions and still get paid well. That's why if a Forex managed account and a Forex fund return the same results for a period of time, the investors of the Forex fund will have more profits because of the lower commissions. This makes the Forex funds more attractive than the Forex managed accounts.

Both investment opportunities are not directly reflecting the condition of the world economy. Investments in Forex funds and Forex managed accounts can be profitable even in times of crisis and fluctuations in the prices of stocks, indexes, real estate, obligations, securities and commodities.

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