Considering starting a small hedge fund good idea? bad idea? advice?

[volente_00]

Quote from the1:

This is not true. An accredited investor has to have a net worth of at least $1M or have earned at least $200k in the past 2 years single, or $300k married. The minimum investment is $25k. A fund can accept up to 35 non-accredited investors but these investors cannot be charged a performance fee. If the fund starts as an exempt fund -- 15 investors or less and $400k or less -- all of these requirements get waived.

Can you show me where you are getting the 400k limit from ?



http://www.nfa.futures.org/NFA-registration/cta/index.HTML

 

[lazar206]

Quote from Ciatronic:

oh, sorry, I didn't pay full attention when I read your thread. I thought that 100% is your target.

Good luck and keep us up to date, I'm also looking into the near future to start something like this.

regards.

Can you share your trading experience and your plans for a startup? I am trying to find people in similar situation so we can share concerns and ideas.
Thanks

 

[timcar]

PPM as an investment "unit." from LEApup, from page 1, this thread

What is a PPM cause this seems good ???????????

 

[LEAPup]

Private Placement Memorandum.

 

[timcar]

Tell us more about this PPM seems like a good plan for this guy ?????

 

[RobertG]

Quote from toc:

Screw the hedge fund and its start up costs.............why not just get 15 accredited investors and start managing their funds like a hedge fund and charge them management plus incentive fees.

This is the best advice you received here!

Here are some things to consider:

1) You will not have the same psychological make up when you trade other people's money. it's a different game all together.
Been there.

2) Trading larger chunks of capital might entail a lower rate of return

3) Dealing with legal paperwork will slow your trading. it's a pain.

And you know what? People are ungrateful! you will make money, and it will never be enough.

 

[corelove]

Don't do it. Why give up 80% of your profits?

http://tinyurl.com/Hedgediy

But if you insist. The above will show you how to do it.

 

[Ghost of Cutten]

The way I would do it is this - start an incubator and get yourself audited each year. Turn down 9 out of 10 clients. And perform well.

Audited performance record is the thing people care about in *sticking with* a hedge fund. Connections can raise $1 billion but if you flop then your fund closes in 18 months. As Julian Robertson said, what matters in this business is performance above all. If you can perform, you will succeed. Connections and marketing make it happen quicker, but better to be a great trader with no marketing or connections, than the other way round.

 

[LEAPup]

Quote from Ghost of Cutten:

The way I would do it is this - start an incubator and get yourself audited each year. Turn down 9 out of 10 clients. And perform well.

Audited performance record is the thing people care about in *sticking with* a hedge fund. Connections can raise $1 billion but if you flop then your fund closes in 18 months. As Julian Robertson said, what matters in this business is performance above all. If you can perform, you will succeed. Connections and marketing make it happen quicker, but better to be a great trader with no marketing or connections, than the other way round.

Agreed!
It's better to be profitable that right...

 

[lazar206]

Quote from corelove:

Don't do it. Why give up 80% of your profits?

http://tinyurl.com/Hedgediy

But if you insist. The above will show you how to do it.

I am not sure what you mean when you say giving up 80% of profits. My account size now is half a million, lets assume a return of 20% a year , my profit will be 100k a year, however if I manage a fund let’s say of 10 million, my management fee will be 500k (20% of profit + 1 % of assets). Off course we need to know what the cost of running the fund will be, that’s the concern NOT the 80% of profits the investors will be getting. Can you explain?
Thanks