How is money allocated to a strategy?

Once Algodeal has signed an agreement with the Quant to use a strategy, money will be allocated from one or several funds managed by Algodeal.

The funds which invest money in that strategy will pay a performance fee based on i) the audited performance and ii) the allocated amount for that strategy.

Fees are charged to the funds for a Calculation Period, initially quarterly. This is the basis of all payments for the fees both to our investors and quants.

The amount allocated on a strategy is dynamic and decided by Algodeal on its entire own discretion.
This allocation process is not bound to the Calculation Period. Changes can be made overnight.

When are the fees paid to the Quant?

Payments of the performance fees follow the Calculation Period schedule of the funds. The quant receives payment for the performance of his/her strategy over a Calculation Period at the end of that Calculation Period.

Even if positive, the performance for a Calculation Period is subject to a high-water-mark: a performance fee is not paid until any carry forward loss for the strategy is erased.

Can a Quant monitor the performance of his/her strategies?

Algodeal will give online access to the quant to monitor the amount allocated to the selected strategy with details of orders, trades and the estimated performance.

Audit

The external administator of the funds tracks the allocation for every strategy. Each strategy tags every trade it initiates. At the end of every month, the external administrator calculates the performance based on the list of trades.

The external administrator calculates and keeps record of the allocated amount, the cumulative performance, the high water mark, the carry forward loss and the accrued performance fee for every strategy.

Moreover, the funds’ accounts are audited yearly.