Help CenterPAMM, short for Percentage Allocation Money Management, serves as an investment mechanism enabling investors to allocate funds to a designated money manager. These funds are consolidated into a single account, empowering the trader to effectively manage investments on behalf of the investors.
The money manager will be entitled to a performance fee, calculated as a fixed percentage of the trading gains. The remaining profit or loss is then allocated back to the investors based on the percentage of funds they each contribute to the total pool.
Example:
Investor A: €50,000
Investor B: €30,000
Investor C: €15,000
Investor D: €5,000
Total funds managed by the money manager: €100,000
If the money manager charges a 20% performance fee and generates a profit of €12,500 up to the profit share date, the money manager will retain €2,500 (20% of the profit) as a performance fee. The remaining €10,000 will be distributed proportionally among the investors based on their contribution size:
Investor A receives 50%
Investor B receives 30%
Investor C receives 15%
Investor D receives 5%