PAMM has the clearest investor story of any managed-account model: you own a percentage of a pool, and the pool's results are yours in that proportion. Nothing about the explanation requires the investor to understand allocation methods or lot sizing.
How shares are calculated
An investor's share is their capital as a proportion of the total pool. If the pool holds one million and an investor contributed one hundred thousand, their share is ten percent, and ten percent of the pool's profit or loss is theirs.
The complexity arrives with movement. When capital enters or leaves, every share must be recalculated against the pool's value at that moment — otherwise a new investor inherits gains that occurred before they arrived, or existing investors are diluted by money that has not yet been at risk.
Fee structures
Managers are typically compensated through a management fee — a percentage of assets, charged regardless of performance — and a performance fee, a percentage of profit, usually applied against a high-water mark so the manager is not paid twice for recovering the same losses.
Both should be configurable, and both should be visible to the investor.
When PAMM is the right model
- The manager runs one strategy and applies it uniformly to all investors.
- Investors want a simple, transparent story about what they own.
- The operational preference is to trade a single account rather than many.
- Performance reporting should be pool-level rather than per-account.
If different investors need different exposure, MAM is the better structure. If clients want to choose and drop a strategy themselves, copy trading fits better than either.
See a PAMM pool view
The demo includes a pooled fund with investor shares on sample data.