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Starting a Hedge Fund
- Thread starter ktm
- Start date
Quote from optioncoach:
This whole hedge fund v. prop shop is a silly argument.
UNless you tell me that a person can get 40:1 overnight.
I think it is up to the individual to determine what is best for them then to make blanket statements that it is silly to start a hedge fund, you should always go prop.
Many traders us 100 to one for longer term strategies, and if it fits their overall plan to do this, they don't mind paying a bit to use it (vs. giving away 80% of their profits).
As I mentioned earlier, we have hedge funds within our organization, and I think that the larger funds are fine but....what is often overlooked...."retail" hedge funds often don't receive interest on short stock, and our traders do, of course.
To reiterate....the borrowing of OPM of a few hundred grand or a couple of million, and calling yourself a hedge fund, is where I take issue. The better traders, who prefer working for themselves, often opt to simply put up $25-$50k of their own money to keep 100%.
I really am not trying to "argue" (I tend to get enough of that result anway around ET, LOL)- but I do see some misunderstanding of just how things "can" work, and yes...I agree that everyone should weigh all the benefits before commiting to any longer term trading venture.
Bright traders certainly do a lot more than simple daytrading, and always have.....I've even had people ask me about that..."don't I have to go home flat everyday?" - of course not, how the heck can you trade M&A and pairs and other market neurtral stragegies by going home flat everday?
Anyway, when all is said and done, all of us traders have to make money in the long run, so let's focus on that and "get along."
All the best,
Don
hi again guys... offshore-based FX trader here...
i had a set-up until now whereby i wld open managed (PoA basis) client accts with a UK-based broker acting as my prime broker. the prime would allow me to trade in bulk on a number of ECNs and allocate P&L to sub-accts on a weightings basis. no extra / hidden etc costs, no need for me to be registered anywhere... the perfect set-up... until recently...
basically, 6 months ago they started worrying that the FSA might object to me having no registration while receiving significant sums from the prime (disclosed mark-ups) monthly, therefore asked me to move all my clients over to their US sub, and get some sort of registration over there within a year or so... (series 3 sufficient?)
just a zero-cost paper move but, problem is, post Refco, some of my clients dragged their feet... the prime started harassing them administratively 2 mths ago using AML as an excuse, making ludicrous requests that they shld resubmit all manners of certified / notarized documents just to keep their acct open with the UK house! they balked, some of them withdrew their funds...
in the end last week, i decided to raise the matter with the FSA and terminate my relationship with this broker altogether, and look for a better set-up
no intention to set up a fund myself, i have consulted extensively and i do not like the operating costs even for a BVI set up - only got $1-2 mio AUM and could grow to 5-10 but not desirable because of scalability issues with my strategies, and i already get 100x leverage anyway...
what i am exploring right now is a partnership with an offshore hedge fund shell provider, using a world class custodian, they handle AML compliance balooney, produce a daily / weekly NAV, handle subscriptions / redemptions, allow me to use the ECNs / brokers of my choosing and switch as appropriate, and allow me to trade the fund via a consulting agreement, and based on THEIR registrations... meaning i can expand into futures etc trading on behalf of clients, without the regulatory hassle... no upfront costs to me, need only CHF1mio AUM to get going, set up takes 2 to 3 weeks since the umbrella structure is already in place, low negotiable custodial-type fees and a fair split of manager collected fees, mark-ups etc that can offset their custodial-type fees... meeting with them in Geneva next week to agree those splits in detail, notably my management / performance fee that i am not keen to split at all...
you guys familiar with firms offering similar type of services?
i had a set-up until now whereby i wld open managed (PoA basis) client accts with a UK-based broker acting as my prime broker. the prime would allow me to trade in bulk on a number of ECNs and allocate P&L to sub-accts on a weightings basis. no extra / hidden etc costs, no need for me to be registered anywhere... the perfect set-up... until recently...
basically, 6 months ago they started worrying that the FSA might object to me having no registration while receiving significant sums from the prime (disclosed mark-ups) monthly, therefore asked me to move all my clients over to their US sub, and get some sort of registration over there within a year or so... (series 3 sufficient?)
just a zero-cost paper move but, problem is, post Refco, some of my clients dragged their feet... the prime started harassing them administratively 2 mths ago using AML as an excuse, making ludicrous requests that they shld resubmit all manners of certified / notarized documents just to keep their acct open with the UK house! they balked, some of them withdrew their funds...
in the end last week, i decided to raise the matter with the FSA and terminate my relationship with this broker altogether, and look for a better set-up
no intention to set up a fund myself, i have consulted extensively and i do not like the operating costs even for a BVI set up - only got $1-2 mio AUM and could grow to 5-10 but not desirable because of scalability issues with my strategies, and i already get 100x leverage anyway...
what i am exploring right now is a partnership with an offshore hedge fund shell provider, using a world class custodian, they handle AML compliance balooney, produce a daily / weekly NAV, handle subscriptions / redemptions, allow me to use the ECNs / brokers of my choosing and switch as appropriate, and allow me to trade the fund via a consulting agreement, and based on THEIR registrations... meaning i can expand into futures etc trading on behalf of clients, without the regulatory hassle... no upfront costs to me, need only CHF1mio AUM to get going, set up takes 2 to 3 weeks since the umbrella structure is already in place, low negotiable custodial-type fees and a fair split of manager collected fees, mark-ups etc that can offset their custodial-type fees... meeting with them in Geneva next week to agree those splits in detail, notably my management / performance fee that i am not keen to split at all...
you guys familiar with firms offering similar type of services?
fyi, now confirmed that perf / mgmt fee is not to be split, remains 100% for the manager...Quote from 2cents:
meeting with them in Geneva next week to agree those splits in detail, notably my management / performance fee that i am not keen to split at all...
am sitting down with these guys on weds. their package uses UBS as the prime broker, and a mix of 1st tier platforms to trade most asset classes...
doesn't seem they have much competition...