How to start a small mom & pop fund ?

F

fbirdien

With help from friends & family , can one start a (sort of) nano hedge fund or lets say a fund in US with following characteristics –

- Establish a limited liability company ( LLC)
- Total Capital from investors no more than 500K
- Use long/short strategies without limitation ( not be regulated like mutual fund)
-Use derivatives and futures
- Raise capital from person with any level of income
( unlike hedge fund requirement per wiki - "An accredited investor is an individual person with a minimum net worth of US $1,000,000 or, alternatively, a minimum income of US$200,000 in each of the last two years and a reasonable expectation of reaching the same income level in the current year.")
- Charge management and performance fees
- Set up terms regarding min number of days notice required to withdraw capital form the fund

Would appreciate input from anyone who had experience with this, if its possible .


Thanks
 
Lol. Just open accounts and have a limited power of attorney to affect transactions. You don't need to do anything special. Just fund an individual account, and have yourself as "authorized trader." That's all you have to do. The tens of thousands to spend to start a mutual fund is not worth it below $10 million, so I don't think you should really even think about it. Besides, regulation costs thousands of dollars a year, too, and I don't think you want that. Just fund your $10,000 accounts now and trade your friends and families money. If you're good it'll grow, but unless you've traded for at least 2 years it's unlikely to be profitable.
 
Quote from bwolinsky:

Lol. Just open accounts and have a limited power of attorney to affect transactions. You don't need to do anything special. Just fund an individual account, and have yourself as "authorized trader." That's all you have to do. The tens of thousands to spend to start a mutual fund is not worth it below $10 million, so I don't think you should really even think about it. Besides, regulation costs thousands of dollars a year, too, and I don't think you want that. Just fund your $10,000 accounts now and trade your friends and families money. If you're good it'll grow, but unless you've traded for at least 2 years it's unlikely to be profitable.
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This is best advice, I have around 650k of friends and family and I still won't bother with forming fund, cpo, etc. It's just a headache that is not needed.
 
i thought if u have less than x investors and a total of money invested of less than x, then you can just set up a LLP/LLC and start managing the money?
 
fbirdien:

The advice you have been given here is solid. Go with the power of attorney as step one ... effective and efficient.

Concentrate on your trades not establishing a legal framework. IB and others have given you a structure that works.

You don't have to be an attorney (and I am not) to realize that what you propose is not in accordance with the regs and you open yourself up to all sorts of liability.
 
Quote from fbirdien:

With help from friends & family , can one start a (sort of) nano hedge fund or lets say a fund in US with following characteristics –

- Establish a limited liability company ( LLC)
- Total Capital from investors no more than 500K
- Use long/short strategies without limitation ( not be regulated like mutual fund)
-Use derivatives and futures
- Raise capital from person with any level of income
( unlike hedge fund requirement per wiki - "An accredited investor is an individual person with a minimum net worth of US $1,000,000 or, alternatively, a minimum income of US$200,000 in each of the last two years and a reasonable expectation of reaching the same income level in the current year.")
- Charge management and performance fees
- Set up terms regarding min number of days notice required to withdraw capital form the fund

Would appreciate input from anyone who had experience with this, if its possible .


Thanks
More...

one more:

- create rift with family and friends when they realize they did not really understand what you are doing. you are unlikely to make money longterm, and you may blow up one day.

Seriously, people who cannot catch on with serious funding often turn on their friends and family as more willing victims. They give them a line and take their money based on trust. That is also how most sales of MLM companies work - "convince those close to you to pay for overpriced products since you cannot convince strangers who can get the same thing at Target for considerably less and also get a warranty/return policy on their purchases..."
 
Good advice TZ.
Initially was kind of annoyed, but makes sense TODAY.

However I still need to get over cyber- fortune-teller statement -
"you are unlikely to make money longterm, and you may blow up one day."

May be its a way to motivate a newb in a ..umm ..constructive-negative way.

But I will try hard...fall, bleed, get up, get hurt ..but some day will make it.



Quote from TraderZones:

one more:

- create rift with family and friends when they realize they did not really understand what you are doing. you are unlikely to make money longterm, and you may blow up one day.

Seriously, people who cannot catch on with serious funding often turn on their friends and family as more willing victims. They give them a line and take their money based on trust. That is also how most sales of MLM companies work - "convince those close to you to pay for overpriced products since you cannot convince strangers who can get the same thing at Target for considerably less and also get a warranty/return policy on their purchases..."
More...
 
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