Looking to allocate to funds in a managed account structure

Quote from AAAintheBeltway:

I would advise any manager considering this proposal to run it by legal counsel. I think the other investors might well have a breach of contract action against the manager, unless this investment were set up in a separate fund.
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Just to clarify, a managed account is a separate account and the assets in that account are not co-mingled with fund assets.
 
Quote from hedgefunds:

First of all, let me state that this program is not a fit for every fund manager. It works for managers who are confident in their strategy, already have personal capital invested in their funds (or are willing to put up such capital) and are seeking to increase their AUM. Look at it from this perspective:

If you put up 1M, you are matched with 9M, for an account which totals $10M. At 15% return per annum and above, the manager receives 50% of profits (standard incentive fees are 20% in a typical single strategy fund and aren't tiered to reward higher levels of performance).

<b>For argument's sake, say that the manager returns 20% on the 10M account (2M). The manager would retain 50% of profits (1M). In a normal structure, the manager would only retain 20% of profits (400K). </b>

The 10% contribution is a requirement from the institution funding the accounts, so that the manger has some "skin in the game" and their interests are aligned.
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Not quite sure that I follow your math here. You stated that returns over 15% per annum would be paid at 50%. So, for your example, if a manager returns 20% (2M), what they would actually make is (1.5M*20%) + (.5M*50%)= $550k. Better than the $400k with a typical 20% incentive (although you are likely not paying the typical 2% mgt fee, which would actually make the total 2/20 deal come out to $600k), but certainly not the $1M that your example came up with. Maybe I am missing something here?

If anyone is interested, I'll offer the same deal in any increment over $500k, with a straight 50% payout, not over a 15% hurdle. Just so long as you don't have a historical drawdown over 10%.

Cheers
 
Quote from hedgefunds:

I know there are a few hedge fund managers who visit these boards, so I wanted to let everyone know about this program:

Our firm is working with an established asset management firm who is seeking to allocate at least $9 MM each to several managers across a broad ............For example, for every $9 MM allocated, the manager will contribute $1 MM. .......

Thanks and I look forward to speaking with you.
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With £1 million, I can take it to £2million a year. Don't need any more "fund". If making 1 million a year is not enough for you, you are too greedy. greedy kills.

always a leamer
 
Quote from me2:

what a racket.

is this nigerian fund of fund manager that will send u a check for 20million and ask u to deposit and write a check back for 11million cause its hard to get money out of his country?
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It would all depend on who first deposits money and who withdraws all the deposited money quicker. :D
 
Quote from Arb Under Par:

Not quite sure that I follow your math here. You stated that returns over 15% per annum would be paid at 50%. So, for your example, if a manager returns 20% (2M), what they would actually make is (1.5M*20%) + (.5M*50%)= $550k. Better than the $400k with a typical 20% incentive (although you are likely not paying the typical 2% mgt fee, which would actually make the total 2/20 deal come out to $600k), but certainly not the $1M that your example came up with. Maybe I am missing something here?

If anyone is interested, I'll offer the same deal in any increment over $500k, with a straight 50% payout, not over a 15% hurdle. Just so long as you don't have a historical drawdown over 10%.

Cheers
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Thanks for catching my typo and I actually asked the moderators to remove that calculation as it was incorrect. When I realized it, it was after 30 minutes had elapsed, therefore I was unable to edit the post myself :(
I was planning on explaining the correct calculation to anyone who contacted me, but so far I haven't reached any fund managers through Elitetrader.
You are also correct that no management fee will be paid.


If you have the capital ($9M per account) to fund such an arrangement as you proposed, we should talk as I can certainly find a few takers....
 
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