Starting/Working for a Hedge Fund

YES!!!!! You will always come across 1 or 2 investors who will nag you to death or try and tell you how to manage the fund. I had one guy tell me he wanted to become the co-manager. Make sure you have a clause in your fund that states you can toss an investor for absolutely no reason. It will come in handy. You really gotta nip things like this in the bud. I had to tell one guy to stop contacting me or I was closing his account.

Quote from Cutten:

Do you find it annoying to deal with investors, compared to trading alone? Or is it not a problem.
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I didn't use a broker for anything other than opening an account and placing trades. Some will help you with the reg's and marketing but I didn't need either.

Quote from Ccal831:

Who did you go with as a Prime Broker and how did that help you?
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If you use lawyers, accountants, administrators, and other misc costs you're looking at about 40-50k to get off the ground. I took a different route....I got a bunch of friends and family together and said, "Hey, here's my performance, I'm starting a hedge fund. Are you in or out?" I didn't get many no's. I then hopped on over to www.moneymanagerservices.com and created all my paperwork myself for $250. I did all the accounting with the exception of tax prep. My total startup costs in the first year were around $1k. In essence, I did an incubator fund with actual investors and bypassed the route that most hedge funds take. Once I had a year under my belt, and some profits I turned the legal work over to an attorney who charged me $17k. I would not accept an investor I didn't know until I had the PPM/Contracts done professionally. I still do the accounting myself to keep my costs low but my taxes are farmed out.

Quote from hypo:

What kind of costs are there to set up and maintain? I'm guessing you need legal/accounting for sure.
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Yes, that makes perfect sense as long as friends and family are your only investors. When you step outside that circle, into the world of professional hedge fund investors, they will insist on a top rated auditor and administrator.

best,

surf
 
Quote from dibcompany:

I am currently researching to start my own incubator fund like you did. I used to be a successful day trader for 5 years and want to take those skill sets to start my own fund with my own money.

Second, I want to preserve capital. I basically want to defer paying taxes until I withdraw money out of the fund. That can be let's say 10 years later when the returns have mutiplied pretax amount.

My questions are:

- How do I set up the firm so that the money I manage is tax-sheltered until the fund is withdrawen just like mutual fund?
- Is there regulatory body that governs standards/restictions and requirements?
- What was your minimum back office cost when you started your incubator fund?

Anyone with info will be greatly appreciated.
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I may be wrong but do not think money is tax sheltered in a mutual fund. i thought that any buying and selling in a mutual fund is the reason why have to pay short term and long term gains every year in my mutual funds, even though i dont sell a share. most funds dontbuy and sell so much like us day traders do.
If you are right that would be great and want to know how to set it up
 
Quote from ProfitTakgFool:

It's not about being right or wrong. You shouldn't really care what the market does. Put yourself in a position to profit from the market, regardless of the direction.

All my professors in college went on and on about the Random Walk Theory and I rejected it. My trading career took off once I accepted it. Statistics explain randomness.
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this is one of the reasons why I participate on www.elitetrader.com

its to run into persons and accounts like these...this has been one of the most intellignt and insightful threads I have read in a very long time...

what I highlighted as quote from your other comment are evidence of such....

I appreciated hearing of your successes.....keep sharing, and perhaps it will spread to more of us too.....
 
Starting and running a fund requires a distinct skill set from trading. It requires the trader attention to detail as much as a legal degree. If your not willing to read everything and perform due dili, don't try you are risking your time and capital. I've started broker dealers and spent the past several years focusing on business development for an inv mgmt company, it is not a pretty or exciting job. It is forms, reading, waiting. Forms, reading, and waiting. The costs of entry are not that high for the payoff, and it is my dream to team up with a group of traders to start developing a few incubator funds. There are companies that cater to incubator funds i.e. hedgeco.net.

Anyone interested in working with me, I am currently studying trading and looking for future partners. I am interested in alternative investments and alpha dogs only.
 
Quote from ProfitTakgFool:

It's not about being right or wrong. You shouldn't really care what the market does. Put yourself in a position to profit from the market, regardless of the direction.
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BTW: Great thread. However, you haven't told us much about the strategies behind your great success....trading time-frame, derivatives or stocks, any options - on futures or equities or indices ?
If multiple strats, what was your best winning strat ?
 
Quote from syswizard:

BTW: Great thread. However, you haven't told us much about the strategies behind your great success....trading time-frame, derivatives or stocks, any options - on futures or equities or indices ?
If multiple strats, what was your best winning strat ?
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let me answer that question for you:

sure, right after you devoluge all those details first

you realize that if you asked that same question, to, say GS Prime Brokerage division or BSC Mortgage Financiang Unit, or Joe-Six-Pack Hedge Fund, exactly how they do their business and at what levels, what kind of answer you would get:

1) sign a non-disclosure
2) post a surety bond and non-compete clause
3) who's asking and why?
4) exactly who are you...

5) all of the above
 
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