Quote from marky1:
Do A) and E) not contradict each other, i.e. you say the first 25% is completely for the investor, yet in E you say if you make less than 25% you want 5% so A is not what you meant. No offence man but you're not living in the real world.
good point you brought up, Marky1, gee, I didn't realize that!
|:B
(LMAO)
Just kidding.
No, actually, it's a subtle distinction. sorry for the misunderstanding. the difference is this.
let's say the funds manager/trader produces 100% profit in the 2-year lock-up period.
the investors get 25% "clean." the manager/trader gets
75%.
check this out: say a manager/trader (MT) has a $1b fund. after the two-year lock-up trading period the MT writes the investors a check for their principle PLUS 25%. done.
then he writes himself a check for $750,000,000.
however, IF the 25% target mark is NOT hit, THEN a sub-structure kicks in, in which the MT gets a straight-up 5% (or more or less, however the individual HF is set up) management fee.
see?
the more Competent the Trader the higher the management % fee.
example: any granny can daytrade equities these days in the stock market. takes a little more knowledge of how to swing around derivatives and maybe try to pull off corporate 'raids' on broken down companies to kick around the old executive stiffs, so leave that slacker stuff to the PhD quant scrubs to try to make profits.
but when you're at the level where you can effeciently and effectively swap around global currencies... and make money
by design - the MT who can do that isn't even in the same league with typical HF shufflers who strain to beat market benchmarks.
that currency MT can command whatever management % fee he wants.
on the other side of the secondary sub-structure (downward), a performance % can also be allotted to the MT, OR completely done away with so that the investors net more.
overall the later arrangement would look like this:
say the fund only makes 24% or 20% or 10% or whatever... the MT's take is 5%, even if the fund makes 3%. Yes, the investors still have to pay the piper.
but no 20% performance fee. notwithstanding, all operating/legal/audit expenses come out of the fund.
It's pretty simple. It's just a multi-layered pay-off system.
overall I think HFs should get back to more closely resembling Alfred Winslow Jones' original HF structure that was more performance-based.
we need to flush the fck-ups out of this industry so the real traders can get paid what they are worth. the slackers just water down payday: they're in the way.
they need to get competent and effecient or go back to sweeping the floor at Walmart with their PhD and MBA degrees.
Just like in the markets, 95% of participants don't belong there, same in the money-running industry.
then again, maybe we should keep 'em in. 1. they jam the SEC's machine. 2. they make investor's appreciate the value of a
real trader.
