Thank ssb11 and bolterv for the excellence inputs.
Money Mangers Marketing
- Thread starter LongView
- Start date
. 0% paid right now, in any tier.I don't think the average American has "friends and family" with $5 million of trading capital they are willing to risk with an unknown trading newbie...
"Hi - I am starting out to trade other people's money. Do you want to put $100,000 into my venture?" (I know, I know - Madoff lost a lot of people's money, but I am different - my ideas work on sim and paper trading. Seriously - look at my 6 month backtest results!!!)
I would say you need to hack this number down by 95+%. Like $75,000 maybe...
And someone who starts risking the money of friends and family is a serious fool. A really serious fool.
You have a person who cannot support himself on his trading (warning #1).
But he has a "profitable idea" that just needs OPM. (warning #2)
It is well believed that 95+% of traders lose their money (warning #3)
But this trader "is different" (warning #4)
This person has no problem risking the money of those he cares about, those who trust him (warning #5)
ETC. ETC.
Assuming:
1. Your CTA program (the Program) inception data is 1/1/2005.
2. The disclosure document (dated 1/1/2005) specifies the fee is 1/10.
3. Before 1/1/2008, you have 10 client accounts.
4. You charge 1/10 to all such 10 client accounts.
5. On 1/1/2008, you like increase your fee schedule.
6. The disclosure document (dated 1/1/2008) specifies the new fee is 2/20.
7. Any client accounts after 1/1/2008 will be charged 2/20.
8. However, the first 10 client account opened before 1/1/2008 will still be charged 1/10 per agreement, since you can not (or would not want to) go back to ask them to sign a new agreement to increase your fee from 1/10 to 2/20.
Based on the above assumptions,
1. Before 1/1/2008, the compose performance table on any DD dated before 1/1/2008, will still based on 1/10.
2. However, after 1/1/2008, how are you going to calculate your performance? How do you do this in real live?
Nihao,
Wo hun hao (excuse my clumsy Mandarin).
Good question, and it beomes even more complicated when you are up and running and have to start dealing with new money, redemptions, HWM's and performance fees on a monthly basis.
I'm more familiar with this issue under a traditional offshore managed futures hedge fund structure as opposed to a CTA, however I'll share what I know.
As a CTA your investment vehicle is not a single "fund" per se. Rather all your clients will have an account at your brokers (generally) that you trade for them. You must track performance for each account independently.
Worthwhile to note that performance for a CTA can be highly segmented - for example this client wants more leverage, this client wants more expsoure to energy products, this one wants a commodities only portfolio etc.
Therefore you will need to use a model account (don't call it that) with (say) partners funds as the basis for your track record that is generally representative of your trading strategy.
Do some research on NAV (net asset value) calulations, and have a good sniff around the NFA website.
All the best.
bolter
Wo hun hao (excuse my clumsy Mandarin).
Good question, and it beomes even more complicated when you are up and running and have to start dealing with new money, redemptions, HWM's and performance fees on a monthly basis.
I'm more familiar with this issue under a traditional offshore managed futures hedge fund structure as opposed to a CTA, however I'll share what I know.
As a CTA your investment vehicle is not a single "fund" per se. Rather all your clients will have an account at your brokers (generally) that you trade for them. You must track performance for each account independently.
Worthwhile to note that performance for a CTA can be highly segmented - for example this client wants more leverage, this client wants more expsoure to energy products, this one wants a commodities only portfolio etc.
Therefore you will need to use a model account (don't call it that) with (say) partners funds as the basis for your track record that is generally representative of your trading strategy.
Do some research on NAV (net asset value) calulations, and have a good sniff around the NFA website.
All the best.
bolter
exaltedangel09
Guest
I'm going to let you finish, but this may be one of the most informative threads on hedge funds of ALL time.
Thank you to everyone who contributed.
Thank you to everyone who contributed.
Great thread, thought I would try to revive it.
Pursue and build relationships with small family offices and UHNW's--- forget institutions-a waste of time. wise words.
Pursue and build relationships with small family offices and UHNW's--- forget institutions-a waste of time. wise words.