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Investment fund structure

In this first blog post, I want to share some knowledge on trading for investors on a professional level. I am going to explain a common fund structure used to trade investor capital.

Almost 2 years ago we went on the journey to set up our own investment fund focussed on fx trading. Through this journey, we learned what goes into setting up a fund and what a potential fund structure looks like.

If you decide to take your trading to the next level and want to take on investors, most jurisdictions require you to obtain certain licenses and build up a certain company structure.

There are multiple fund structures, which are all pretty interesting to see. If you ever want to start a fund or invest in a fund you need to know a few things...

The key to setting up your fund is to create trust between you and the investor. The way of doing this is to obtain the necessary licenses and registrations, but also by separating their funds from your entity. That is at least how we do it.

In the Netherlands you have a structure called "FGR" which in simple words means that you have two entities:

1. A foundation that serves as the legal owner of the capital, not accessible to the fund managers

2. A limited company to manage capital for trading purposes.

The diagram below shows you how this looks like in an "FGR"

You as the trader work for the Fund Manager. The only rights the Fund Manager has is to trade the capital on the broker account and invoice the foundation for management/performance fees generated.

This is a very basic example of what a fund structure looks like. In later blogs, we might dive deeper into this topic.

Speak to you soon! Kind regards, Max

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