Start-Up Hedge Fund Question
- Thread starter rjontrades
- Start date
Loving this thread, thnx.
I'm very interested in pursuing some kind of performance based money management. I hear everything you say, but are we not putting the horse before the cart somewhat - i.e. even with a good track record and the right administrative set up, I invisage it will be incredibly difficult to attract investos. In a different thead I spoke with a guy who said competition for assets in the US is fierce.
Me, I'm in Australia, and am thinking education has got to help somewhat with marketing. I was a lawyer for 4 years, have subsequently got a Masters in Applied Finance and am now one exam away from the Chartered Financial Analyst. I've been trading intermitantly so the investment record needs work, otherwise I need to partner with someone with a great record who could also play a mentor role to me.
Anyway, I wanted feed back on how people plan to attract investors and how difficult it will be, and what matrketing credibility you might expect from education qualifications so long as you've also got the investment record.
ACA, I'd thought of the Managed Account idea also, and think its a great idea that could be ramped out past 20m under management easy, and very profitable. Plus with Managed Accounts you've got the reassurence to clients that you're not comingling their funds and that they're protected by account insurance.
I'm very interested in pursuing some kind of performance based money management. I hear everything you say, but are we not putting the horse before the cart somewhat - i.e. even with a good track record and the right administrative set up, I invisage it will be incredibly difficult to attract investos. In a different thead I spoke with a guy who said competition for assets in the US is fierce.
Me, I'm in Australia, and am thinking education has got to help somewhat with marketing. I was a lawyer for 4 years, have subsequently got a Masters in Applied Finance and am now one exam away from the Chartered Financial Analyst. I've been trading intermitantly so the investment record needs work, otherwise I need to partner with someone with a great record who could also play a mentor role to me.
Anyway, I wanted feed back on how people plan to attract investors and how difficult it will be, and what matrketing credibility you might expect from education qualifications so long as you've also got the investment record.
ACA, I'd thought of the Managed Account idea also, and think its a great idea that could be ramped out past 20m under management easy, and very profitable. Plus with Managed Accounts you've got the reassurence to clients that you're not comingling their funds and that they're protected by account insurance.
This begs the same question I pose to all who "want to start a hedge fund"....Why not just get $25K or $50K, we'll let you use more than $1Million...and you keep ALL the profits (pay back the small amount you borrowed, and then be in charge of your own career). This format just seems so much better than having to sweat the fact that you are "accountable" to a group of your friends (maybe soon to be "ex" friends). I have explained this to a zillion traders over the years, and most have opted out of the whole hedge fund fiasco.
If you aren't planning on making any money via trading, and just want the 2%, then that's something else...but if you plan on making money trading, it just seems silly to give away all the money.
IMHO...
Don
Rjon,
You've gotten some good advice here...except for the last post about going prop. I also contend you can get set up for $20 - $30K without cutting corners. I would suggest taking a bit out of the $500K, maybe 50 - 100K and putting it in your expense acct outside of the fund. Once you start trading your account in the fund, take the 2/20 (or whatever) from your own account and add it to the expense account - just as with any other client. Feel free to PM me as well.
Armo,
With all due respect to the certifications and qualifications you are getting, it is my belief that marketing is largely about performance. Looking at some of the CTA/CPOs out there today, there are some with outstanding paper credentials and Wall St backgrounds who have performed poorly and seen money leave them (or never arrive). Others who are void of degrees and have done little more than find an edge or two and exploit it for solid numbers have attracted more money than they could handle. Some outright scams have attracted 9 figures over the years. Having said that, regardless of the manager's background, he needs a solid team of accountants, lawyers, auditors and compliance staff to ensure that the fund is on solid ground with regulators, investors and all others who have an interest in this business. I think the marketing takes care of itself if you are putting up good numbers. Marketing is largely prohibited if you are under any of the exemptions provided by regulators, as most hedge funds are.
You've gotten some good advice here...except for the last post about going prop. I also contend you can get set up for $20 - $30K without cutting corners. I would suggest taking a bit out of the $500K, maybe 50 - 100K and putting it in your expense acct outside of the fund. Once you start trading your account in the fund, take the 2/20 (or whatever) from your own account and add it to the expense account - just as with any other client. Feel free to PM me as well.
Armo,
With all due respect to the certifications and qualifications you are getting, it is my belief that marketing is largely about performance. Looking at some of the CTA/CPOs out there today, there are some with outstanding paper credentials and Wall St backgrounds who have performed poorly and seen money leave them (or never arrive). Others who are void of degrees and have done little more than find an edge or two and exploit it for solid numbers have attracted more money than they could handle. Some outright scams have attracted 9 figures over the years. Having said that, regardless of the manager's background, he needs a solid team of accountants, lawyers, auditors and compliance staff to ensure that the fund is on solid ground with regulators, investors and all others who have an interest in this business. I think the marketing takes care of itself if you are putting up good numbers. Marketing is largely prohibited if you are under any of the exemptions provided by regulators, as most hedge funds are.
Good advice to most, but building a fund from 500K to > $10 million can be done -- it is a tough road but the rewards are tremendous. Plus, beware of biased statements such as "hedge fund fiasco" -- don't let someone with an agenda interfere with your dreams.
Saw this item this morning and thought i t mite b of interest 2 those of u starting up a fund and keeping the costs low....... dont know anymore then the article reports but u can investigate if u like what u see:
NEW YORK (HedgeWorld.com)âHedgeTek, a partnership allocation and tax-reporting system used by fund managers and administrators, has been linked to Web-based GoSystem Tax RS so that users can file electronically Form 1065 and Schedule K-1 for hedge funds and other investment partnerships. ......
NEW YORK (HedgeWorld.com)âHedgeTek, a partnership allocation and tax-reporting system used by fund managers and administrators, has been linked to Web-based GoSystem Tax RS so that users can file electronically Form 1065 and Schedule K-1 for hedge funds and other investment partnerships. ......
I understand your point Don, but I think the main difference is risk. With a fund setup, the risk is borne by the investors in that the trader could have a 30% drawdown and still trade back out of it without the investors pulling the plug on him (assuming they understood the risk profile coming in, certainly no one would be happy but that is part of qualifying investors first). In a prop environment, there is no way you would be allowed to lose 30% of a million with only $25k on deposit. Also, you would have more flexibility with holding overnight (my understanding is that most hedge funds are not daytrading in the strict sense) and also with regards to the instruments you trade.
I see advantages and disadvantages to both methods, my point is that it is not as cut and dried as it may seem. Having no experience in a hedge fund however, I defer to those that do. This is just my opinion after looking at both sides.
Well, as we all know, raising money for new hedge funds is pretty tough these days.....and since we have several funds under our umbrella, and have had several successful traders out for 18 months trying to raise money....and these guys are good, with a legitimate track record.
In this case, I have no real agenda here since you all can trade wherever you like (I realize that the few cynics may think differently, so be it)...I honestly think that some people just don't think the whole thing through. There was a time in my life when I had to raise $100K from outside sources (with a "50/50" split), and was able to pay it back within 3 or 4 months, and believe me it was worth it to be out from under other people's scrutiny. This was back in the "glory years" when there were edges trading options on the exchange.
Calling it a hedge fund is fine, but we all know that it is simply raising "Other People's Money" ....and if you have to pay 80% of your profits just to borrow money, it seems a bit excessive. IMO.
I may address this on next weeks's chat session if you like... Andre' is scheduling something for me I think.
No reason for a big debate...it's pretty simple, and should be able to be accomplished for about $10K or so.
Don
Are you telling me that I can come work for Bright and put up $25-$50k and be allowed to use capital of $500k + to hold positions overnight, weekly,monthly or yearly for that matter and act as a portfolio manager as opposed to a "day trader"?
If this is the case then please let me know and I will make it out to Vegas asap for an interview...
Im very interested ~
keep up the good work around here!
If this is the case then please let me know and I will make it out to Vegas asap for an interview...
Im very interested ~
keep up the good work around here!