Cool...Thanks for the advice I appreciate it. Mainly my question was the formation of the fund. That's the last thing I need is to actually form it. I have a track record and some high net worth individuals I think I can sell it to. I also have good selling agents. Do you have any advice on getting the fund (I think I'll be a CTA) formed.
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Advice on Staring a Hedge Fund
- Thread starter lasner
- Start date
Cool...Thanks for the advice I appreciate it. Mainly my question was the formation of the fund. That's the last thing I need is to actually form it. I have a track record and some high net worth individuals I think I can sell it to. I also have good selling agents. Do you have any advice on getting the fund (I think I'll be a CTA) formed.
Quote from heech:
A lot of people are able to cut all of those costs out by doing just about everything in house... say, $2k-$5k for everything. You don't even necessarily need to engage a lawyer, since the NFA will ultimately tell you if your disclosure is acceptable or not. [/B]
Heech...That would be awesome if I could get a CTA formed for $2-5K.
I'll send you a PM...If you could point me in the right direction I'd really appreciate it.
A CTA is not a "fund". You would be trading managed accounts.
Note that anyone involved in soliciting for a commodities program must have taken their series 3 and be NFA registered (as an associated person).
The NFA website is very informative, and their staff is willing to help. If you are looking to do it on the cheap, start here:
http://www.nfa.futures.org/nfa-registration/cta/index.HTML
Find a CTA program that approximately looks like what you're doing... copy their disclosure, and start editing it. There's a ton of legal pitfalls here, so always be ready to consult a lawyer.
Note that anyone involved in soliciting for a commodities program must have taken their series 3 and be NFA registered (as an associated person).
The NFA website is very informative, and their staff is willing to help. If you are looking to do it on the cheap, start here:
http://www.nfa.futures.org/nfa-registration/cta/index.HTML
Find a CTA program that approximately looks like what you're doing... copy their disclosure, and start editing it. There's a ton of legal pitfalls here, so always be ready to consult a lawyer.
Quote from heech:
A CTA is not a "fund". You would be trading managed accounts.
Note that anyone involved in soliciting for a commodities program must have taken their series 3 and be NFA registered (as an associated person).
The NFA website is very informative, and their staff is willing to help. If you are looking to do it on the cheap, start here:
http://www.nfa.futures.org/nfa-registration/cta/index.HTML
Find a CTA program that approximately looks like what you're doing... copy their disclosure, and start editing it. There's a ton of legal pitfalls here, so always be ready to consult a lawyer.
I guess I could get started as a CTA now without registering and once I hit 15 clients register. I'll probably pick up the series 3 now to get started. Hey thanks for the advice...It helped
Quote from heech:
A CTA is not a "fund". You would be trading managed accounts.
Note that anyone involved in soliciting for a commodities program must have taken their series 3 and be NFA registered (as an associated person).
The NFA website is very informative, and their staff is willing to help. If you are looking to do it on the cheap, start here:
http://www.nfa.futures.org/nfa-registration/cta/index.HTML
Find a CTA program that approximately looks like what you're doing... copy their disclosure, and start editing it. There's a ton of legal pitfalls here, so always be ready to consult a lawyer.
Heech,
Just to get your opinion. Do you think a 50% selling agreement is too much? So on a fund if I was to charge a 2% and 20% fee and offered 1% and 10% to the selling agent for the capital they raise...you think that's too much?
Way, way, way, way too much. You should just offer them an arm and a leg instead.Quote from lasner:
Heech,
Just to get your opinion. Do you think a 50% selling agreement is too much? So on a fund if I was to charge a 2% and 20% fee and offered 1% and 10% to the selling agent for the capital they raise...you think that's too much?
It makes no sense to start a CTA/CPO fund if you have less than the registration minimum of 16 clients and less than the minimum $25 million in AUM.
Since you have less than that you are much better off with an advisor account at IB:
http://institutions.interactivebrokers.com/en/accounts/advisors/advisorsMain.php?ib_entity=inst
BTW notice IB has excellent turnkey solutions for advisers, hedge funds, and prop. trading groups.
Since you have less than that you are much better off with an advisor account at IB:
http://institutions.interactivebrokers.com/en/accounts/advisors/advisorsMain.php?ib_entity=inst
BTW notice IB has excellent turnkey solutions for advisers, hedge funds, and prop. trading groups.
Agree that Family and Friends advisor account with IB is best, at least to start.
From a client perspective its also very secure. Each client is given sole access to their own sub-account with a unique username and password.l The advisor cannot wire money in or out of the client accounts or have any access to it apart from trading. The advisor cannot even deduct fees. IB can do this automatically but only if each client agrees to by signature.
Makes it quite hard to "take the money and run".
From a client perspective its also very secure. Each client is given sole access to their own sub-account with a unique username and password.l The advisor cannot wire money in or out of the client accounts or have any access to it apart from trading. The advisor cannot even deduct fees. IB can do this automatically but only if each client agrees to by signature.
Makes it quite hard to "take the money and run".
Quote from lasner:
Within my track record I guarantee to not lose more than 7% of the initial capital. If at any point the fund dips below a 7% loss I return everyone's capital and walk away.
How I did it was in the beginning I would risk .5% of total capital on each trade ($75). In order to be down 7% I would have to have 13 consecutive losing trades.
"Guarantee" actually means capital-protected. Do you mean you will return what's left or you'll return their total investment?
It doesn't matter if you don't guarantee their investment, not many funds do this. Just don't get yourself into legal trouble by offering these sorts of promises. If your returns are as good as you say they are, you wouldn't need to anyway.
From a statistical point of view, the risk of having 13 consecutive losing trades could be anywhere from extremely unlikely (if you had, say 70%+ winners) to quite likely (<50% winners), depending on your trade sample and win percentage.
What was your win percentage for your 70% year?
And what was your maxDD during that year?