Wealth management: FAQ

Q. What ROI shall I expect?
A. We strive to be profitable every single month. Our clients generate ~0.5-1.5% monthly returns.
Our historical returns should not be considered as indicative of our future results.

Q. High ROI assumes very high risks?
A. Our Sharpe ratio (August 2016) is around 1.5 and Calmar around 10.0. Most of the time the cash levels exceed 95%.

Q. Sounds too good to be true
A. We provide records of our past trades and access to the accounts at Interactive Brokers to prove that the returns are very real.

Q. Ok, How it works?
A. We have adapted for retail the strategies used by market makers. These advanced options strategies allow us to deliver relatively consistent results with mild draw downs.

Q. Management Fees? Trading fees?
A. We are aware that some funds charge 5 percent of assets and 25 percent of profits. We have completely different fee structure. Our management fees depend on profitability and limited by fixed, low amount. Most of our accounts pay flat annual management fee. If we don't make money for our clients we do not charge fees. There is no upfront costs. In a typical month we place 2-4 trades and use ~15% of available margin. Unlike many other wealth management firms we do not accept 3rd party fees or incentive payments.

Q. How can I withdraw the funds?
A. We manage Your account with Interactive Brokers. We trade only highly liquid assets. Most of the time the accounts are 90% or more in cash. You can close opened positions by yourself or ask Interactive Brokers to close the positions any time and withdraw the funds. Interactive Brokers charges flat, low rate for wire transfers. Usually you will see the money the same day. You do not have to notify us about your decision to close the positions. We recommend to contact us before you close the positions and discuss with us the most optimal way to do that.

Q. How comes that you charge flat management fees and are still profitable ?
A. By leveraging available free or low cost infrastructure we keep our expenses low; our strategy allows us to place only a small number of trades every month; unlike our competition we are not spending 60% and more of our revenues in administration and sales costs;our advertising budget is zero;majority of our profits is generated by trading for our own accounts.

Q. What happens when the markets move fast?
A. We generate most money for our clients in the high volatility markets. Most of the time the accounts are slightly delta positive. When volatility moves higher options premium moves higher as well and ROI improves.

Q. I have 50K cash available for investment and 200K mortgage. Does it make sense to use your services?
A. Generally we are not recommending our clients to invest money in risky assets if they have debt to net ratio above 20%. Your decision shall take into account the free money flow, Your financial goals, time horizon, age and many other variables. We encourage You to contact us and ask for consultation.

Q. I have 5K cash available for investment. Does it make sense to use your services?
A. Unlike many other fund managers we do not pool accounts together. We place trades in each and every account separately. Our strategy does not require day trading permit, but it does require a healthy margin. The strategy does not scale below 30K USD and will involve significant risks for a smaller account. We recommend to have at least 50K USD cash in the account.

Q. How do you calculate drawdowns? What was the largest drawdown?
A. We calculate drawdown from the highest water mark. For example, an account can be in 12% profit since inception, but 3% drawdown since the last month. Out strategy limits the maximum draw down by 30%. So far the maximum draw down 30% was touched only once. In 2015 our worst draw down was 9%.

Q. How do you charge management fees?
A. There is no upfront fee. We send an invoice to our clients every 12 months. Our clients are expected to wire us the stated amount in 48 hours. If a client stops using our service one day before the current 12 months period ends she will not get an invoice.

Q. Can I open a corporate account?
A. Absolutely. Interactive Brokers will open a trading account for your business. Our management fees are the same for all account types.

Q. How do I transfer to you the funds?
A. There is no need to transfer funds to us. We will not accept your funds if you wire the money to us. Our clients open an account at Interactive Brokers in their own name and assign us as a financial adviser.

Q. How do you calculate end of month/year profit?
A. We are trading highly liquid assets. Mark-to-market model of measuring of the fair value of a portfolio fits very well our trading strategy. We use the Account Net value as reported by Interactive Brokers. The Account Net value reflects the current market price of the portfolio and is fairly close to the liquidation value of the portfolio.

Q. Who can withdraw funds from my account at Interactive Brokers?
A. Only an owner of the account can withdraw the funds. Interactive Brokers allows to withdraw the funds only to the bank accounts under the same name. Only an account owner can transfer funds between accounts.

Q. How can I follow performance of my portfolio?
A. Interactive Brokers provides Android and iOS applications. You simply install the application and login. In the end of a trading day Interactive Brokers sends an e-mail confirmation for every trade in the account. Finally Interactive Brokers provides a WEB interface and a standalone desktop application where you can monitor your account 24/7.

Q. Can I place my own trades?
A. This is your account and you are free to place your own trades. You will have to unlink the account from the adviser account via the WEB interface in the Manage Account/Add or Link Accounts section.