What are the costs, and how do CTAs get paid?
There are basically three types of charges involved when a managed account is handled by a CTA. An annual management fee usually between 1–2 % of the value of your account is charged for the overseeing of the trading in your account. Normally this fee is charged in monthly, for example a 2% annual fee would result in a 0.1667% monthly charge being applied to the account. Most CTAs also charge a performance incentive fee which typically runs from 15% – 25% of the cumulative net trading profits calculated at the end of each quarter. The net trading profits are the combined total of profits and losses from trading. Other costs associated with a Managed Futures account include FCM brokerage costs, exchange and regulatory association fees.
