Hedge Fund looking to provide capital

C

CarolinaCpaGrad

long story short :

i have a DEBT ONLY hedge fund looking to expand its offerings of funds.

they will/can raise $$$ from existing clients. i would be running the equity fund under their "umbrella"

how would you structure the deal ?

split ownership of the equity fund, fees ? if so, what %s.

as for a piece of the whole firm ?

thoughts ?
 
Quote from CarolinaCpaGrad:

long story short :

i have a DEBT ONLY hedge fund looking to expand its offerings of funds.

they will/can raise $$$ from existing clients. i would be running the equity fund under their "umbrella"

how would you structure the deal ?

split ownership of the equity fund, fees ? if so, what %s.

as for a piece of the whole firm ?

thoughts ?
More...

The deal depends on the level of service you'll be expecting from your parent fund. Which side of the firm (you / parent) will be doing:

1. The clearing / auditing. Who's going to be taking care of all the middle office stuff?

2. Legal / Compliance. Who's going to be taking care of all the legal stuff?

3. Trading infrastructure. Will you be expecting to trade through the parent's sub-account? If so, what will the fees be? Some funds will act as your broker and charge a little fee on top of what they pay.

4. Usually, you'll be sole owner of the fund. But with a different fee structure. The issue is more about whether you'll be part of their group or a white-labeled share class.

5. Another issue is your credentials in the industry like audited track record and experience. Are you marketable to clients? Have you worked with big name institutions? How well are you connected?

6. More details you give about your fund and yourself, more productive the advice will be.

One final note. Trading skills and performance accounts for only 30% of the success of a fund. 70% is about marketing and sales.
 
Quote from TSGannGalt:

One final note. Trading skills and performance accounts for only 30% of the success of a fund. 70% is about marketing and sales.
More...

Agreed.
 
Quote from TSGannGalt:

The deal depends on the level of service you'll be expecting from your parent fund. Which side of the firm (you / parent) will be doing:

1. 6. More details you give about your fund and yourself, more productive the advice will be.

One final note. Trading skills and performance accounts for only 30% of the success of a fund. 70% is about marketing and sales.
More...


good points.

i'm expecting them to handle virtually every aspect outside of the mgmt of the fund investments and the investment team. transactional costs are pass thru as i have better clearing relationship than they on the equity side.

i've been in the business since 93 and have managed two funds since. the latest since 00. excellent track records but not applicable since running <$25M is a world of difference from running $100M+. i've found running and keeping a larger piece of much smaller fund has been more than competitive compensation wise with less work versus a large one.

what are the current thoughts on asset levels to make a fund viable ? even though insana was a fund of funds, he couldn't get past 200m and make it work at those levels.

in retrospect, i should have launched at the beginning of my career. made a fortune producing sub par returns for the past decade like virtually everyone else.
 
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