“If only I could make one investment into managed forex accounts, and rely on it as a stable, long-term investment”.
Have you ever found yourself asking that question? We have!
- One investment, where you could set and forget your funds, with confidence, and allow them to consistently grow for an extended period of time?
- One investment that you can have sureness in to be properly diversified, balanced, and manage risk well (all of which are extra important with an FX investment)?
- And one “best kept secret” investment that will, year after year, beat your buddies and family and friends investment portfolios (yet that you would feel comfortable recommending to them due to the stability of it).
From our interaction with many investors over many years, that is the question that we find brought up the most, and we must digress, it’s been one that has been on our minds since day 1 (many moons ago) and has constantly troubled us as to the ideal solution.
We are pleased to announce that we have finalized a, (or least our version of a) solution to this; THE MFH BALANCED FUND.
We realized that in order to make this work, it needed to be kept simple… very simple, without sacrificing the benefits of the old model (i.e., it must stay in individually managed accounts format). This is so that investors will never lose the sought after transparency and liquidity of a managed investment, and they can remain as engaged as they like, but do not need to be occupied with the maintenance required to properly diversify and balance an FX investment.
What exactly is the MFH Balanced Fund?
Again this is nothing revolutionary here in theory or concept. Its main distinction is in the structure. It is simply a way to invest in multiple managed forex accounts that are specifically designed and selected to be part of a greater portfolio which will be overseen and adjusted as required by a portfolio analyst. It is in principle, an “index fund” of most of our managed fx products.
Investors simply sign one LPOA for the MFH Balanced Fund. This LPOA permits the manager to open multiple managed accounts for you in order to diversify your investment. You have transparency on each individual account as always. Every month (or every few months if there is a low deviation among them), your funds will be re-balanced across each of the multiple managed accounts automatically in pre-defined ratios. Each month end, we send out a link to a sheet indicating the funds that are being included for the next month, and the ratios of investment. Your funds will reflect this re-balancing.
Thus, it is designed to take ALL of the guesswork out of this for you and it ensures that each period starts equal or in the proper ratios, and the funds never get dis-proportionally weighted from one another - and hence neither does risk.
We have kept the funds individualized in separate managed products (rather than feed them in to one fund) as although it is more work administratively, it keeps accounting cleaner, it is more transparent for those wishing to stay more engaged/active with the individual strategies, and it makes it easy to compensate trading teams, as well as to “hot swap” new funds in or out as required as part of the portfolio. It is the perfect all-around solution.
Why can’t I just do this myself?
Well… you can! All funds will still remain available for individual investment, or for diversification for those wanting to build their own custom portfolios. The problem with this do-it-yourself approach, are a few fold. Namely…
- Investors usually don’t have intimate knowledge of the funds and how they work together (by design and selection).
- Investors get troubled with “paralysis by analysis”
- Investors (despite best intentions) usually don’t properly balance their investment (or risk).
- Investors (despite best intentions) usually don’t properly diversify their investment, And thus…
- Investors live and die by every trade when they are over exposed.
This is of course a bit of a generalization, but one that has become very apparent to us over time. And this is not at the fault of the investor by any means, as it is hard-wired in to most of us (and that includes us)!
We have discussed this in the past at great length, that if we are to succeed in being profitable over an extended period of time, we need to align ourselves with our own psychology vs. clash with it. This generally boils down to prospect theory (i.e., understanding that we interpret losses as being much more pronounced and painful than the pleasure of gains), and that the journey is equally as important as the destination when making a sizeable investment for an extended period of time.
We have simply come to realize that no matter how much we write about this, without putting specific actions in place that overpower or offset our natural habits, they will hold very little chance of sticking, and thus succeeding.
This is the same concept as removing junk food from your house if you are on a diet or trying to be healthier. Or getting your gym bag ready the night before your morning workout. This small actions can have a huge impact on your goals and ultimately success. The same holds true for the MFH Balanced Fund, in that the structure itself will help us succeed and avoid some of the pitfalls we usually get caught in (in Forex, we call these the Forex “one night stands” as opposed to the Forex “relationships” we prefer to be in).
A prime example of this, is if we look at our Nova Fund as a case study. It had a tremendous run earlier this year, and had a HUGE return in February banking close to +18% in the single month. Despite our newsletters explaining the cyclical nature of the markets and how it often effects even the top performing algos, we noticed a huge flood of capital pour in to this fund. People who were perfectly diversified across multiple funds of ours, balanced their fund to be top heavy, or even to a 100% allocation in with Nova Fund.
This is of course a natural reaction. Nova Fund has a tremendous history, and after a huge month like February, who in their right mind wouldn’t want “more of that”? The problem is, our natural reaction here can quite often do us more injustice than not.
To an inexperienced fund manager, they will welcome the capital shift with open arms, as they are also themselves more often than not being short sighted and overly optimistic, and hence often promote the fund even harder. To the experienced manager however, the capital shift by many investors can be an indication of potential problems further down the road.
Last month, Nova Fund was flat. This month, Nova Fund is currently down -6% on the month. While this is not devastating by any means in terms of aggressive forex trading, those who moved 100% of their portfolio over to this fund, will feel this exposure in a more magnified fashion (especially if they missed the profitable run earlier in the year), and then they become much more engaged in the trading, and find themselves living and dying emotionally by every upswing or downswing – all of which are completely normal and expected.
If Nova Fund was for example properly diversified as say ¼ of their portfolio, that -6% drawdown in this example would only represent a meager -1.5% of their total investment.
Again this is not to draw attention to anyone specifically who did this, as again it is a very natural reaction. People can make a lot of money by trying to “time the market”, but this is very difficult to do and it requires a lot of luck! What usually happens instead, is people end up chasing gains, and catching consecutive losses or stagnating for huge periods of time.
We strongly, strongly believe that a well thought out, properly diversified, and actively managed portfolio of a few carefully selected strong and non-correlated funds (while being careful not to over-diversify) is a much more effective approach to investing in the FX markets.
The active management is an important piece here, as the fx markets are dynamic, and it does often require action<>reaction. But this needs to be done logically and methodically, vs emotionally or behaviorally which is the default mode of reacting for everyone. The MFH Balanced Fund has been designed from the bottom up, to be the one stop shop and ultimate solution for this.
What the MFH Balanced Fund is NOT
While we have been able to clearly demonstrate what the MFH Balanced Fund is, and the problem that it is providing a solution for, it is also important to understand what it is not. Let us list this out…
- It is not a get rich quick investment. It is not a product for the impatient investor. It is designed with a focus on long-term investment in mind, focusing on annual returns. It is the ultimately set and forget forex investment for the long-term.
- It is not assuming big risk in exchange for big returns. The target range with this project is NET 30-50% per annum. Of course coming in below this is possible, and if we exceed it by a little or a lot, that will be fantastic, as it won’t be at the expense of more risk. Those wanting to chase higher returns will likely be better off trying to time the market with various other funds and signals to be honest. That is simply not the purpose of this project. It is for those who want peace of mind to park funds in terms of having risk actively managed properly on their behalf, and making a very modest, yet well above average annual return.
- It will not win every month. As most of you know we focus on algorithmic based trading, and have a strong bias towards building portfolios with algos. While there are certainly a few rare manual traders who can trade the FX markets in good order for a long while, these people are as rare as the white buffalo. The lure of manual traders, is that they can produce track records with very few negative months … for a certain period of time that is. The downside to this, is that they inevitably get caught in a very bad to career ending trade situation where they compromise their account and, as such, the funds of their investors to the point of an impossible recovery, or one that cannot be accomplished without them assuming considerably more risk, or you as an investor, assuming considerable amounts of time in a disproportionate fashion.This is based on hard data in addition to being our strong opinion. When we contrast this to aglos, we anticipate (yet prefer), well managed risk, at the expense of possibly more losing months. Thus we often have manual traders which may hold “prettier” track records (vanity track records), yet are susceptible to bigger risks, and then we have algos which are more sensitive to smaller fluctuations in a changing market, but have downside risk systematically calculated in advance without discretion or emotion.
This is the camp we are choosing to side with here especially as it relates to this specific project. Again, just before any of you get disgruntled with this statement…. we know there are good manual traders out there. We just prefer algo based strategies for this particular project, even at the expense of potentially more overall negative months (as our focus for this project is first on foremost on risk management, and “big picture” analysis). Even despite this, we feel our negative months with the project will be fewer and further between. In time we may explore the option of adding some manual traders in to the fund if we can find one that fits our requirements and we feel comfortable with.
- It is not for “newbie” investors only. In fact, to be perfectly honest it is the opposite, as we see the newbie investors as the ones most likely to try and roll the dice with timing it and chasing certain profit targets. This is for professional and inexperienced investors alike!We have built this out of our own desires and is how we will be investing in our products. This is our flagship and connoisseur grade investment product and it is ultimately our way of adding value by helping to increase your chance of success of investing in the FX markets.
The performance history for the MFH Balanced Fund, is based on an equal weighting simulation currently consisting of our current core funds. Based on an equal 4-way split, since the inception of each fund, and the product has exceeded the forecasted benchmarks every year!
You can view the dedicated page for this strategy on the following link: http://www.managedforexhub.com/our-funds/mfh-balanced-fund/.
Getting started is easy. If you already invested with us, just reply, or drop us a note and let us know you want your investment as part of the MFH Balanced Fund.
If you are not an investor yet, and this resonates well with you as something you are interested in, simply complete a very brief pre-application online here.
Afterwards you will be directed to a set of sign up instructions to get your account open, funded and connected to receive the trades. The approval process takes less than 24 hours, and is entirely online.
Again we must stress than the managed funds structure is the best in the entire investment industry. Funds stay segregated in your own personal account at all times with your full control to close at any time and with no lock in periods – i.e., your investment is always fully liquid.
The MFH Balanced Fund makes it even that much more attractive in that multiple funds shall be actively managed on your behalf, as part of a portfolio.
If you have any questions or would like to discuss investment in this product in more detail, please just give us a shout! We would be more than happy to chat with you!
To open account click here to GET STARTED NOW.
Best Regards,
Managed Forex Hub