Reading net PAMM returns after fees

A PAMM account page may display a return percentage, but you need to know whose return it represents, which period it covers and which costs have already been deducted. The manager’s account return, a strategy’s overall return and the outcome of an investor who joined midway through a period need not match. Start with the investor’s statement and a precise definition of the measure, rather than the largest percentage on a chart.

Establish the calculation basis first

Ask whether the reported figure uses account balance or equity, including unrealized gains and losses. Establish the start date and whether the manager’s performance fee has already been deducted. Closed trading profits can coexist with losses on open positions, so balance alone may not describe the complete outcome.

If you deposited or withdrew money during the period, simply dividing the balance change by the opening capital can be misleading. Time-weighted and money-weighted measures answer different questions. The report should explain its method and treatment of cash flows. Without that explanation, two percentages may not be comparable.

Do not deduct the same cost twice

• Execution costs: spreads, commissions and overnight financing may already be reflected in recorded trading results.
• Manager fees: these depend on the agreement, including the calculation period and conditions such as a high-water mark.
• Transfer and conversion costs: these may arise when funding, withdrawing or changing currency, outside the manager’s performance percentage.

For each cost, identify the statement entry and whether the displayed return already includes it. Deducting a commission twice is as incorrect as ignoring it.

A hypothetical example with no cash flows

Suppose opening capital is 1,000 units and there are no deposits or withdrawals. Trading produces a gain of 100 units after execution costs but before the manager’s fee. If the hypothetical agreement charges exactly 20 percent of that gain, with no other costs, the fee is 20 units and the investor’s net gain is 80 units. Under these definitions, the gross return is 10 percent and the after-fee return is 8 percent.

This is not a Pamm Iran tariff, performance forecast or universal account rule. A high-water mark, fixed charge, unrecovered loss or different settlement period can change the calculation. Even in this example, currency conversion may change the result measured in the investor’s own currency.

Which records should you reconcile?

1. Record opening and closing balance and equity, with dates and the relevant time zone.
2. Separate deposits and withdrawals from trading gains and losses.
3. Compare the manager’s fee statement with the agreement applicable to that period.
4. Establish whether unrealized gains and losses are included or excluded.
5. Ask the manager or host about a discrepancy before making another decision; do not automatically assume fraud or user error.

Moving from a calculation to an informed decision

The scenario and cost calculators can help isolate the effect of different assumptions. They do not replace an official account statement. When reviewing available trading accounts, consider costs and liquidity alongside the drawdown history, rather than in isolation.

A net return is a historical outcome with a specific definition, not a promise that the outcome will recur. This educational article is not personal advice about selecting an account or committing an amount of capital. Trading and managed accounts can involve substantial losses.