aiSource
INVESTMENT ALTERNATIVES.
TRUSTED ADVICE
Menu

Notional Funding

Notional funding is the term used for funding an account below its nominal value. For example, assume a CTA requires a minimum investment of $1,000,000 (the “Nominal Value”) and the margin requirement is $50,000.

The investor can either deposit $1,000,000 to “fully fund” that minimum investment requirement or she can invest only a portion of the $1,000,000, as long as she meets the $50,000 margin requirement. Now assume that the investor decides to fund the $1,000,000 account with $100,000 (the “Funding Level”). This means that the investor is using leverage of 10X—ten times $100,000 equals the $1,000,000 minimum investment. The difference between the Nominal Value ($1,000,000) and the Funding Level ($100,000) is $900,000. The $900,000 is referred to as “Notional Funding”.  Please see below a notional funding matrix that shows the impact on returns and losses based on the notionally funded amount:



                notional-funding-matrix


CTA DATABASE

Sign up to access hundreds of different managed futures programs in our CTA database.

aiSOURCE NEWS

Get the latest reports in managed futures, straight from the Source. Enter your email and get the news.

aiTRACKER

A simple way to monitor your CTA portfolio without the hassle of looking at FCM statements.

Past performance is not necessarily indicative of future results. Trading commodity futures, options, and foreign exchange ("forex") involves substantial risk of loss and is not suitable for all investors. In no way is the advisor of the month a direct recommendation of aiSource or any of its affiliates. Please carefully review the disclosure documents and any other promotional material prior to investing with any program. Managed accounts and/or managed futures are very risky and may not be suitable for all investors. Please consult with a Managed Futures specialists prior to investing.