This is the most striking in what I read. Minus 1 correlation makes variance zero. It is as if one get insurance and gets paid for having insurance.
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Starting a fund / raising capital
- Thread starter doublet83
- Start date
This is the most striking in what I read. Minus 1 correlation makes variance zero. It is as if one get insurance and gets paid for having insurance.
There are all kinds of investors who want all kinds of things.
Some want protection, some want uncorrelated returns, some want the highest returns they can get, some want a particular asset class.
The key for anyone starting a fund is to identify the target investor base, develop an appealing track record, and develop an effective outreach/marketing plan to solicit those investors.
Some want protection, some want uncorrelated returns, some want the highest returns they can get, some want a particular asset class.
The key for anyone starting a fund is to identify the target investor base, develop an appealing track record, and develop an effective outreach/marketing plan to solicit those investors.
Quote from gkishot:
What if the OP has proved return of let say 80%. What's wrong with that? What's the reason it won't attract capital?
I have not attempted to raise capital beyond managing a small amount of money for friends and family, for no fees. At this point I am quite busy and satisfied managing my own account.
Certainly the fact that I'm operating a one man shop with only 2.5 million in funds will discourage most institutional investors, who want to see an organizational structure, and want to be able to invest a few million but only account for a small percentage of your fund.
I assume if I have a broker with more developed fund introduction capabilities, this may help, although I'm not really sure how that would work out.
I'd be curious if anyone thinks I can raise some meaningful capital with my background, and what avenues I should consider pursuing.
Quote from gkishot:
That was exactly my point. Investors want higher sharpe ratio. That's only what matters.
I would generally disagree with that statement. The sharpe ratio in the S&P500 has been excellent over the past 3 years, but this does not tell you much.
Comparing your returns over the most relevant benchmark does not present a complete view but is still very relevant when you're managing a net long fundamental strategy like mine.
For most on the site that have a market neutral, short/medium term trading strategies, yes sharpe is better.
Quote from doublet83:
I have not attempted to raise capital beyond managing a small amount of money for friends and family, for no fees. At this point I am quite busy and satisfied managing my own account.
Certainly the fact that I'm operating a one man shop with only 2.5 million in funds will discourage most institutional investors, who want to see an organizational structure, and want to be able to invest a few million but only account for a small percentage of your fund.
I assume if I have a broker with more developed fund introduction capabilities, this may help, although I'm not really sure how that would work out.
I'd be curious if anyone thinks I can raise some meaningful capital with my background, and what avenues I should consider pursuing.
Your problem is lack of infrastructure.
If you have a cold who will manage the portfolio?
Who do I call if you are on vacation?
What checks and balances do i have on you?
The limited partners are not just your customers but they are your shareholders as well.
"but is still very relevant when you're managing a net long fundamental strategy like mine."
"These returns have been achieved with generally market neutral strategies"
"2011: 87.2% return.
2012 YTD: 36% return."
"Also I don't know where you get 50% from, I've been compounding over 100% over the past 4 years"
You can't even articulate yourself what your strategy is and what your returns are, how are you going to explain it to clients?
I haven't seen anything that would lead me to believe it isn't just speculative gambling, in which case you're better off just investing your own money and hoping your returns continue as they have been. If they can, you won't need to start a fund, you'll be plenty rich enough on your own.
"These returns have been achieved with generally market neutral strategies"
"2011: 87.2% return.
2012 YTD: 36% return."
"Also I don't know where you get 50% from, I've been compounding over 100% over the past 4 years"
You can't even articulate yourself what your strategy is and what your returns are, how are you going to explain it to clients?
I haven't seen anything that would lead me to believe it isn't just speculative gambling, in which case you're better off just investing your own money and hoping your returns continue as they have been. If they can, you won't need to start a fund, you'll be plenty rich enough on your own.
Quote from newwurldmn:
Your problem is lack of infrastructure.
If you have a cold who will manage the portfolio?
Who do I call if you are on vacation?
What checks and balances do i have on you?
The limited partners are not just your customers but they are your shareholders as well.
Yes I acknowledge that issue. My guess is that attempting to raise capital is not the best use of time at this point.
I am looking to hire an analyst in the near future.
Quote from gkishot:
What about collective2? Have you considered this option?
I've glanced at it but it doesn't seem I can get to a level of traction in that platform that is meaningful. Doesn't seem serious managers would use a system like that. Also, I'm not sure if there are conflicts of interest in having something going on with collective2, my own account, and managed accounts.