Managing book for Family Office or high networth individual, possible?

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bln

Been pondering the idea for a while to manage money remotely for an Family Office, CTA or HF as a independent contractor/consultant getting paid by performance purely. Anyone done that setup?

Kids are in school and I do live abroad in Europe so can not relocate to the US at the moment. But working remotely for a firm in Florida, etc. would be possible. Can travel and visit the office 2-4 times a year for meetings/hangout.

Avoid launch my own CTA due to the hassle handling the legal, business, regulation, backoffice, etc.
 
This is nothing new here. If you work for a FO, CTA, then you are just an independent contractor. The same working for hedge fund, or some proprietary group.

You are paid based on the formula of your contract. Then you get 1099 form to report your tax.

Not sure what you are asking with specifics.
 
RedSun said:
This is nothing new here. If you work for a FO, CTA, then you are just an independent contractor. The same working for hedge fund, or some proprietary group.
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I see, my impression's that professional working Portfolio Managers where mostly employees with monthly salary, bonus, benefits, etc.
 
bln said:
I see, my impression's that professional working Portfolio Managers where mostly employees with monthly salary, bonus, benefits, etc.
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It is based on the setup and agreement.

For small FO or HF, they can structure either way, employee or independent contractor. Some proprietary house can just hire you as a trader and you get paid trading their capital.

The main difference is how the firm treats you, if you are a team contributor or more of an individual contributor. If you are hired to perform simple duty to execute trades or generate trading profit, then you will likely be treated as independent contractor.

Most large firms do not hire independent contractor as traders since they work in team setup.
 
I think you may be in for some stiff competition.
The big name in management lately has been Cathie Wood.
But in the past year, her fondness for innovating companies has put in a very dismal price performance.
Her ARKK fund is down 50% trailing 12 months. That will spark account attrition.
Likely lots of look-alike money managers. They are all scrambling to replace accounts that have blown up.

Can you build a track record of positive returns (in your own accounts) in a poor market?
That's a serious question.
 
It is not just a track record, it is the publicity or celebrity status. Look at the track record of Bill Ackman Pershing Square historical performance.

If I invested $10,000 with Pershing Square, I'll have about $27,091 now, compared with S&P 500 total return of to $28,011. If I take out S&P 500 management fee, the results are about dead even.

So why investors pay Bill Ackman 2%/20% management fees and receive market average return?
 
The other question to ask yourself is that, if you get the track record and believe you are good, then why not just trade your own?

If I get 29.8% YTD 2022 and 232% 2021-2022, then I get keep all the profit and do not have to worry about anything else. It is more fun than trading other people's money.

The only upside is that if you trade much capital. Then that is a different world.

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RedSun said:
So why investors pay Bill Ackman 2%/20% management fees and receive market average return?
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Then it comes to the Alternative Investment universe not everything is about returns. One important function is the funds correlation towards the general market. An fund that got negative correlation to S&P 500, even if it under perform a bit is a useful building block for institutions.

By adding these non-correlated funds the institution can lower it's total portfolio volatility over time.
 
RedSun said:
The other question to ask yourself is that, if you get the track record and believe you are good, then why not just trade your own?

If I get 29.8% YTD 2022 and 232% 2021-2022, then I get keep all the profit and do not have to worry about anything else. It is more fun than trading other people's money.

The only upside is that if you trade much capital. Then that is a different world.

View attachment 276788
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One should trade ones own. Personally I have found out that I perform better then I'm managing OPM, so for me it's a benefit in more than one way. My stuff is not very time sensitive, can trade both my own and five other clients books simultaneously. If they don't have a issue with it that is.
 
My experience with PMs who do well managing others' money but perform poorly with their own money is that they play loose with external funding. And then its just statistical probability that we look at those who performed well in a certain period and ignore those who did not. When you expand the track record time span you often see that even those who performed well over a shorter time span go belly up over longer periods.

My point being, someone who does well regardless of whether he is self funded or not generally is one of the very few who developed a true edge. The others are cowboys who play loose with others' money but can hardly pull the trigger when their own funds are on the line. Those are often the ones you see hopping firms every 3-5 years. To me those type of guys are red warning flags.

bln said:
One should trade ones own. Personally I have found out that I perform better then I'm managing OPM, so for me it's a benefit in more than one way. My stuff is not very time sensitive, can trade both my own and five other clients books simultaneously. If they don't have a issue with it that is.
More...
 
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