How Would you manage this fund?

qlai said:
Let’s say someone offered you to manage their money for a year with below expectations. How would you do it?

Expectations:
You will guarantee SP500 return capped at 15% on the upside.
You will guarantee protection of first 10% from peak equity. Assume you can’t afford to eat that yourself. (Edit: or 10% of principal which is probably easier to do)
No management fees, anything above 15% is what you earn.
Client may not withdraw any money for the term.

https://cdn.bfldr.com/86JM1UOD/as/hhhzkk3cp3rjh4cjkrb4nsc/Transamerica_TSIA_Rate_Change_Flyer
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When you are an accredited investor, you get offered a lot of these things.

Stay away. The whole "risk adjusted" great returns are a red herring. No matter how well it does they will ALWAYS clip it and give you just enough. These things are seriously opaque.* When it does badly, they bail themselves out and leave you with a "market adjusted" loss.


Bottom line unless you are into them for over 5 mil, you are a small fish and will get the "pedestrian" treatment because they don't care if you stick around. OTOH, if you got 5 mil to put into a fund like this, there are WAY better options because you are a 200+ mil person.

*I had one where if you watched the time-sales, I actually saw my liquidation go off in some dark like pool, way off the spread. When they reported back you could see how they had a side fund they were using to buy and sell.
 
newwurldmn said:
Buy an SPX zero strike call (OTC)
Sell an SPX 1y 15% call
Buy a SPX 1y 100%-90% putspread

The whole structure receives a credit which is the profit to the company.
The trick is that the client get the price performance of the SPX but not the dividends.
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You are another @destriero :thumbsup:
 
qlai said:
Aren’t these two debit spreads? Why are they at credit?
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yes. they are but they net debit is less than the cost of the SPX.
So you give the company $100,000 to invest in the SPX with this cap and buffer, but the structure really costs like 99,200.
 
Bad_Badness said:
When you are an accredited investor, you get offered a lot of these things.

Stay away. The whole "risk adjusted" great returns are a red herring. No matter how well it does they will ALWAYS clip it and give you just enough. These things are seriously opaque.* When it does badly, they bail themselves out and leave you with a "market adjusted" loss.


Bottom line unless you are into them for over 5 mil, you are a small fish and will get the "pedestrian" treatment because they don't care if you stick around. OTOH, if you got 5 mil to put into a fund like this, there are WAY better options because you are a 200+ mil person.

*I had one where if you watched the time-sales, I actually saw my liquidation go off in some dark like pool, way off the spread. When they reported back you could see how they had a side fund they were using to buy and sell.
More...

What were you trading that you could see a listed trade? Most of these trade via OTC options and structures - often against the internal desk of the bank who then divvies up the risk and sells that off to hedgefunds.
 
Buy some SPX calls a little otm and bang out very short-duration calls against them. CF, at today's levels, should exceed well over 15%, Keep the balance of cash short term and appreciate that historical measures may not generate enough return. Tell you in a year.
 
It's just a bull spread, you can do it yourself. You would have to look at prices to understand if the 10% max los is doable for 15%, but can easily look that up.
 
It seems like such simple options at first glance, right? But just think about all the fees they might end up piling on us. It's like, imagine the little charges building up sneakily, turning into a big chunk of our budget before we even realize it! Definitely something to watch out for.
 
qlai said:
Let’s say someone offered you to manage their money for a year with below expectations. How would you do it?

Expectations:
You will guarantee SP500 return capped at 15% on the upside.
You will guarantee protection of first 10% from peak equity. Assume you can’t afford to eat that yourself. (Edit: or 10% of principal which is probably easier to do)
No management fees, anything above 15% is what you earn.
Client may not withdraw any money for the term.

https://cdn.bfldr.com/86JM1UOD/as/hhhzkk3cp3rjh4cjkrb4nsc/Transamerica_TSIA_Rate_Change_Flyer
More...
Hello qlai,

I will use the client money to manually trade the ES futures market everyday.

I will give clients 60% of profits and I keep 40% of profits.

Nice and easy and simple. Please do not make making alot money so complicated .
 
SimpleMeLike said:
Hello qlai,

I will use the client money to manually trade the ES futures market everyday.

I will give clients 60% of profits and I keep 40% of profits.

Nice and easy and simple. Please do not make making alot money so complicated .
More...
Would you also agree to share 40% of the losses?
 
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