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Managing book for Family Office or high networth individual, possible?
- Thread starter bln
- Start date
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.
Most of the fund managers started with institutions, like Goldman, Morgan Stanley etc. Then they make to the "star" status and get to enjoy like $10MM annual compensation. After some years, they get enough "savings" and enough "fame", so they wanted to start their own. So they get to keep more of the profit cut. Now they are the bosses and they get to keep most of the profit, not their former bosses or the corporate.
But all funds have various restrictions and the boards or trustees. Clearly their the "agency" effect and fund managers like to take more risk. Then they are limited by those bylaws etc. After a few years, some of the fund managers get tired of those restrictions. Then they want to trade their own $$ without any restrictions at all. All this is very common.
For fund manager, it is all fame, capital and profit.
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.
I don't know, for me it's the opposite. Makes me sharper, more attention to details, because I want deliver the best I can. Both for the clients best, but also for my best as I increase my chances to get further allocations if I deliver on the top of my ability.
I'm sure there are people out there that act the way you describe, treating clients money in a sloppy manner.
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.
By far your greatest challenge will be finding customers. You most likely won't.
Remember all investors love "star" power. It is the fame that they are after. This is why Cathie Wood and Bill Ackman have such following. A lot other traders put on similar positions and/or had better track records. But they do not count because they do not get on Bloomberg, CNBC, Youtube and Twitter to promote themselves. Ordinary people just do not have that power.
Trust me, if you can show a 20% return each year for the past 10 or 15 years then you will get the attention and your aum will grow over time. It's utterly irrelevant whether you appear on any talk show or not. What matters is consistency.
Or otherwise you need to fake it and come out with an outlandish approach to investing or be a slick marketer. Though, you will most likely only attract some lemmings who come and who also go as soon as the direction of the wind changes.
Or otherwise you need to fake it and come out with an outlandish approach to investing or be a slick marketer. Though, you will most likely only attract some lemmings who come and who also go as soon as the direction of the wind changes.
Remember all investors love "star" power. It is the fame that they are after. This is why Cathie Wood and Bill Ackman have such following. A lot other traders put on similar positions and/or had better track records. But they do not count because they do not get on Bloomberg, CNBC, Youtube and Twitter to promote themselves. Ordinary people just do not have that power.
Trust me, if you can show a 20% return each year for the past 10 or 15 years then you will get the attention and your aum will grow over time. It's utterly irrelevant whether you appear on any talk show or not. What matters is consistency.
Or otherwise you need to fake it and come out with an outlandish approach to investing or be a slick marketer. Though, you will most likely only attract some lemmings who come and who also go as soon as the direction of the wind changes.
Here is the thing. How many traders trade continuously for 15 or longer, with excellent track record, and are looking for either capital or employment? Very few if you can find any.
Everything changes. We could be working for corporation, smaller firms, and some years for ourselves. You just can't compare your "track record" trading for Shell energy marketing, or Putnam asset management.
For prop traders who have been trading 15 years or long, most are either burnt out, or the rich ones have retired. They would not be looking for employment or other capital to trade.
That's not my experience as professional. MDs around me when I started had already traded 10, 15,20 years and nobody seemed burnt out. You are ignoring that extremely driven people always look for a new challenge. One of the top hedge funds in Asia is run by an American guy who had traded and managed a group at Lehman for a long time. Those type of guys are incredibly driven and ambitious and always want bigger. This is how this industry works. Either you are incredibly driven, successful, and hard working or you are pretentious and try to catch a niche clientele that is easily wound around one's finger. There is not much middle ground.
Here is the thing. How many traders trade continuously for 15 or longer, with excellent track record, and are looking for either capital or employment? Very few if you can find any.
Everything changes. We could be working for corporation, smaller firms, and some years for ourselves. You just can't compare your "track record" trading for Shell energy marketing, or Putnam asset management.
For prop traders who have been trading 15 years or long, most are either burnt out, or the rich ones have retired. They would not be looking for employment or other capital to trade.
That's not my experience as professional. MDs around me when I started had already traded 10, 15,20 years and nobody seemed burnt out. You are ignoring that extremely driven people always look for a new challenge. One of the top hedge funds in Asia is run by an American guy who had traded and managed a group at Lehman for a long time. Those type of guys are incredibly driven and ambitious and always want bigger. This is how this industry works. Either you are incredibly driven, successful, and hard working or you are pretentious and try to catch a niche clientele that is easily wound around one's finger. There is not much middle ground.
Certainly those people exist. But my question is, those people should be in very comfortable position as you described. Why would they be in the market for either capital or for employment? Even some junior people with just a few years' experience constantly receive calls from recruiters.
For the people already in the industry, they are KNOWN. You do not need anything to prove. But for the people who are not, it is extremely hard to break in since you are unknown. I do not want to speculate much about OP, but it appears OP is in the second camp.
For a common ET trader who has $1MM AUM and makes 15.6% annual return as Bill Ackman Pershing Square has done since 2014. This trader is not going anywhere. The track record is not good enough. And this trader does not any other fame or credentials. This is the difference between Bill Achman vs John Joe "the ET Trader". Bill Ackman gets many $MM to enjoy and this ET trader has to look to the market....
Push that fictitious trader's annual return up to 20 or 22 percent and that guy can easily attract capital. 5 to 7 years of consistent, audited returns above 20% on 1mln aum and you will definitely attract capital whether you are a nobody or not.
Certainly those people exist. But my question is, those people should be in very comfortable position as you described. Why would they be in the market for either capital or for employment? Even some junior people with just a few years' experience constantly receive calls from recruiters.
For the people already in the industry, they are KNOWN. You do not need anything to prove. But for the people who are not, it is extremely hard to break in since you are unknown. I do not want to speculate much about OP, but it appears OP is in the second camp.
For a common ET trader who has $1MM AUM and makes 15.6% annual return as Bill Ackman Pershing Square has done since 2014. This trader is not going anywhere. The track record is not good enough. And this trader does not any other fame or credentials. This is the difference between Bill Achman vs John Joe "the ET Trader". Bill Ackman gets many $MM to enjoy and this ET trader has to look to the market....