Starting a Hedge Fund
- Thread starter ktm
- Start date
KTM,
Depending on how much you're raising, the solution might be very simple. apologies in advance if this has been mentioned earlier in the thread. If your raising several million and look to grow, you want a "prime broker". The prime brokerage biz is very competitive now days and they provide turnkey solutions for new start-up hedge funds. Said another way, they'll take care of everything... accounting, legal docs, systems, etc. If you do stocks, Banc of America and Bear Sterns are two of the best/lowest cost. I'm not familiar with commodities, but I'd guess there are similar clearing firms that perform the same function.
Happy New Year!
Depending on how much you're raising, the solution might be very simple. apologies in advance if this has been mentioned earlier in the thread. If your raising several million and look to grow, you want a "prime broker". The prime brokerage biz is very competitive now days and they provide turnkey solutions for new start-up hedge funds. Said another way, they'll take care of everything... accounting, legal docs, systems, etc. If you do stocks, Banc of America and Bear Sterns are two of the best/lowest cost. I'm not familiar with commodities, but I'd guess there are similar clearing firms that perform the same function.
Happy New Year!
Quote from OddTrader:
Are there any good sites with forums for starting hedge funds? Thanks!
http://www.moneymanagerservices.com/overview.cfm
This site seems interesting.
a hedge fund is an unregistered vehicle for pooling a great deal of other people's money together to pursue trading/investing strategies.
no other vehicle is as well suited to this purpose, with the exception of the mutual fund, which is registered, and an even mightier asset gathering vehicle, because they have the right to advertise.
ok - so what's the big deal you might ask, doesn't everybody know this?
well - if you read the definition carefully, you'll see that a hedge fund is a legal vechicle for gathering funds - many people claim to be good traders, but how many are both good traders and good asset gatherers?
sure - you can outsource the asset gatherer bit and hire a professional salesperson - but they'll take a big piece of your income, as much as 50% in the most egregious cases.
so - only if you have the ability to penetrate the industry of instutitional asset managers or the coterie of high net worth families in order to gather the assets does setting up a hedge fund vehicle make sense.
at the end of the day, it's your ability to generate a return on assets that matters. solo trading, hedge funds, prop firms, bank prop desk, CTA, investment club ....et al are just different vehicles with maximum asset size potentials and different profit sharing considerations.
no other vehicle is as well suited to this purpose, with the exception of the mutual fund, which is registered, and an even mightier asset gathering vehicle, because they have the right to advertise.
ok - so what's the big deal you might ask, doesn't everybody know this?
well - if you read the definition carefully, you'll see that a hedge fund is a legal vechicle for gathering funds - many people claim to be good traders, but how many are both good traders and good asset gatherers?
sure - you can outsource the asset gatherer bit and hire a professional salesperson - but they'll take a big piece of your income, as much as 50% in the most egregious cases.
so - only if you have the ability to penetrate the industry of instutitional asset managers or the coterie of high net worth families in order to gather the assets does setting up a hedge fund vehicle make sense.
at the end of the day, it's your ability to generate a return on assets that matters. solo trading, hedge funds, prop firms, bank prop desk, CTA, investment club ....et al are just different vehicles with maximum asset size potentials and different profit sharing considerations.
If you are a good trader...in that you provide a solid market beating return consistently, funds will find you. I don't think marketing is necessary. You can list with a few of the databases (Barclays etc...) and just focus on your returns and keeping the company running.
Just my opinion.
Just my opinion.
ktm,
I'll defer to you on that.
performance should and does attract funds, as does promotion and access.
I do see a number of funds on iasg with good track records but with AUMs that are not commensurate. So, no doubt good numbers will bring in funds, but perhaps getting the word out is a challenge that should not be estimated - especially if your edges have time fuses attached.
the converse (large aum mediocre track records) unfortunately is all too common and easy to explain. Selling skills are just as formidable as trading skills.
I'll defer to you on that.
performance should and does attract funds, as does promotion and access.
I do see a number of funds on iasg with good track records but with AUMs that are not commensurate. So, no doubt good numbers will bring in funds, but perhaps getting the word out is a challenge that should not be estimated - especially if your edges have time fuses attached.
the converse (large aum mediocre track records) unfortunately is all too common and easy to explain. Selling skills are just as formidable as trading skills.
Agreed.
On IASG, check out Diamond, BC Cap Mgmt and Zenith. All have longer records and consistency, albeit nothing thru the roof. All started very small and each is seeing good money coming through the door now. I believe two of the three went from about 1M to 10M+ in the past year. Ansbacher now has over 100M.
BC started in 1999 with 10K...that's not a typo. At the start of this year, he had 600K and is ending the year with about 12M. His performance is not that great, but he's dialing in consistent numbers and has 5 years in the game. He's a great example of what the little guy can do with some dedication, patience and a solid record.
In other news...Aaron Schindler actually went positive for the year!!! After being down a LOT earlier in the year. Congrats Aaron!!! Great recovery from one helluva drawdown.
On IASG, check out Diamond, BC Cap Mgmt and Zenith. All have longer records and consistency, albeit nothing thru the roof. All started very small and each is seeing good money coming through the door now. I believe two of the three went from about 1M to 10M+ in the past year. Ansbacher now has over 100M.
BC started in 1999 with 10K...that's not a typo. At the start of this year, he had 600K and is ending the year with about 12M. His performance is not that great, but he's dialing in consistent numbers and has 5 years in the game. He's a great example of what the little guy can do with some dedication, patience and a solid record.
In other news...Aaron Schindler actually went positive for the year!!! After being down a LOT earlier in the year. Congrats Aaron!!! Great recovery from one helluva drawdown.
agreed,
i personally know people who used to do it part time with a few hundred K and now manage tens of MM.
It can be done - if you are good.
Getting to 100MM+ is an entirely different ball game though, imho, for reasons of strategy capacity, ability to build a team of talent, credentials etc ...
i personally know people who used to do it part time with a few hundred K and now manage tens of MM.
It can be done - if you are good.
Getting to 100MM+ is an entirely different ball game though, imho, for reasons of strategy capacity, ability to build a team of talent, credentials etc ...