My account value reaches $600,000 for the first time; launching incubator hedge fund
- Thread starter lazar206
- Start date
Looks like there's been no activity in this thread for a while but here's my question.
What really is the benefit of trading your strategy in an incubator fund? I know that once you're ready to take on clients it is a means of showing verifiable results, etc.
But how is that different from trading your personal account, having it audited and showing it to prospects as proprietary track record?
And these days, after all the HF fraud cases I would imagine clients would be scared to give up custody of their money.
thoughts?
What really is the benefit of trading your strategy in an incubator fund? I know that once you're ready to take on clients it is a means of showing verifiable results, etc.
But how is that different from trading your personal account, having it audited and showing it to prospects as proprietary track record?
And these days, after all the HF fraud cases I would imagine clients would be scared to give up custody of their money.
thoughts?
although the reason is more or less the same (to show audited perf) an incubator account is more credible to potential investors. an added plus is that once the incubator structure is set up it's relatively easy to go to a full hedge fund structure incl the matter of compensation.
basically you're putting off spending a ridiculous amount of money on accounting, taxes, operations, etc. for a few years while you build a track record. but you will have to spend this money eventually in order to do the abs minimum from a legal and compliance standpoint.
re custody of money issue, i agree it is a huge issue. one way of eliminating it is using a managed account where the securities are in the client's account and they always have full custody over them. obvs a potential problem is they know everything you're doing and an interested client could either A) reverse engineer your investment process or B) give the position data to someone else and they could do that.
hello?
Haven't been on ET in a while, but just read through most of this thread from start to finish tonight. Was thinking the whole time "what the hell is going to happen to this guy when August hits." I made popcorn and everything.
Still, hate to see him get so discouraged. Everybody gets bamboozled like that when you're starting out. Hope he decides to come back.
Still, hate to see him get so discouraged. Everybody gets bamboozled like that when you're starting out. Hope he decides to come back.
No, I haven't got discouraged. Actually my trading looks as good as ever before. I'm up nicely for the year with minimum risk, I'm 70% in cash now, and I keep looking & finding new oportunites.
What I have found though is that must comments here on ET are not very productive. While there a number of people here that offered some real substance advice, I have found that discussing strategy thru PM or e-mail is much more efficient way of comunicating substance.
Thanks for your interest and feel free to drop me a PM if you like.