fee sharing

A

Aaron

For those of you who are CTA's or manage hedge funds... How much do you pay to have other people bring in investors? I've got someone who is willing to sell the Schindler Fund (my managed futures fund) for me but wants a cut of my fees. The fees are 2%/20%. What would be a fair compensation splitting arrangement?

I would do all the account maintenance. The marketing person's responsibility to the client would end once they bring them in my door.

Aaron Schindler
Schindler Trading
 
if the annual fee is 2% and you take a cut of 20% of profits and the introducer is providing the investment from third parties who you do not have to sell to -

a) if you are going to make money - give the introducer 0% of your 2% = 0%, and 10% of your 20% = 2%

as you are the one making the money and he has a free ride and the investors will love him as he got them the deal

b) if you are going to lose money - give the introducer 0% of the 2% = 0%, and 100% of the 20%

I am sure you can work out why

b - sounds like a mutual fund to me - i wonder why those guys mostly don't make a profit!
 
The last I checked it is illegal to pay fees for raising money for in any type of "fund" ..."birdog fees" etc., are specifically against the rules. If you have a Broker take fees, they can go up to 10% I believe....

Gene, do you have any comments on this??
 
I have been pitched by a variety of marketing firms at 5% - 25%, they all say their "structure" circumvents any rule violation. It seems a little shaky to me, however that is what $500 an hour securities attorneys are for, finding the "gray area" in a black and white world.
 
the grey area can of course cost you a lot of money - paying the same attorney and all the other costs - when you have to defend the basis of the grey area - which as it is grey - is a great way for the attorney to make money every which way
 
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