Hedge Fund New Money Troubles

[darkhorse]

Quote from oldtime:

yeah, until you look at Blackrock, that now has over a trillion under management. Somebody had the idea, "There's money in them thar money management hills."

Blackrock, as per the entire mutual fund industry, is incentivized to gather as large an asset pile as they can to make money off the fees -- regardless of whether size hurts performance, which is not much of an issue for closet indexers / asset allocating benchmark huggers anyhow. This is not the same thing as being performance based.

For certain now, my last post on this thread.

 

[RCG Trader]

Quote from oldtime:

if you were managing a hedge fund would you ask questions on ET? Sometimes you just gotta play along.

+1

It's a good mental exercise in any event.

 

[Wide Tailz]

Quote from Ripley:

New money coming into my fund is negatively affecting my fund performance.

When cars enter the freeway, they must use the on-ramp.

When new money enters your fund, it seems obvious that it must be deployed through the next strategy entry.

If the investor is too impatient to allow you to deploy their capital using your strategy, they might not be your kind of client.

"You're not my kind of client"........ -Bill Dunn

 

[WinstonTJ]

The answer is to grow to a large enough mass that subscriptions and redemptions are less than a basis point or are negligible.

 

[Ripley]

Quote from tradin4profits:

Could you imagin putting your hard earned money into any klnd of fund where a supposed "professional" manages it and you see that " professional" asking how to run the fund on an internet message board?

My clients would be fine since I'm a young fund manager, and my expertise is in trading and making money, not in the technicalities of fund accounting.

 

[Butterball]

Quote from Ripley:

and I would have to add more of that share at a higher price. Or on a profitable short position, I would be adding more onto a profitable position at a lower price.

Nothing wrong with adding to a profitable position. I don't see a problem your problem.

 

[Ripley]

Quote from Butterball:

Nothing wrong with adding to a profitable position. I don't see a problem your problem.

It messes up the break even points and thus, the fund performance would be slightly less than what it could have been.

 

[Butterball]

Quote from Ripley:

It messes up the break even points and thus, the fund performance would be slightly less than what it could have been.

And when new money comes during a slight drawdown before a new run-up it will increase performance. The aggregate effect on performance is likely negligible over time.

 

[newwurldmn]

Quote from Ripley:

It messes up the break even points and thus, the fund performance would be slightly less than what it could have been.

But you are on marked to market so break evens are really just yesterday's price, not your entry price.

 

[Ripley]

Quote from newwurldmn:

But you are on marked to market so break evens are really just yesterday's price, not your entry price.

Would be true if all the trades were day trades. But my trades are held for much longer than that.