What is a Multi-Advisor Pool? Legal Insights and Definitions
Definition & Meaning
A multi-advisor pool is an investment structure that allows multiple commodity trading advisors to manage funds collectively. In this type of pool, no single advisor can control more than twenty-five percent of the total funds available for trading. Additionally, if the pool invests in other pools, no more than twenty-five percent of the pool's net asset value can be allocated to any single investee pool. This structure aims to diversify investment strategies and reduce risk by spreading funds across various advisors and strategies.
Legal Use & context
The term "multi-advisor pool" is primarily used in the context of investment management and regulation. It falls under the jurisdiction of the Commodity Futures Trading Commission (CFTC) and is relevant to commodity pool operators and commodity trading advisors. Understanding this term is essential for compliance with federal regulations, especially for those involved in managing or investing in commodity pools. Users can manage related forms and compliance documents through resources like US Legal Forms.
Real-world examples
Here are a couple of examples of abatement:
Example 1: A multi-advisor pool might consist of four different commodity trading advisors, each managing a distinct trading strategy. Each advisor is allocated twenty-five percent of the total investment funds, ensuring a balanced approach.
Example 2: A multi-advisor pool invests in various commodity markets, with no more than twenty-five percent of its total assets invested in any single market or strategy (hypothetical example).