Starting/Working for a Hedge Fund

Quote from marketsurfer:

your education doesn't really matter to investors, but that of your team does. most funds, excepting micro daytrader type startups, have PhD's or Masters in Quant on the team OR at the minimum on the board of advisors.


strategy and niche is more important than returns to all but the least sophisticated hedge fund investors. everyone knows that past performance is not indictive of future performance, let the cowboys with 500 % plus returns dazzle the smaller naive investors while the ultra rich and most institutions seek out a totally different set of criteria--- the ultra rich and institutions do not seek the same criteria either....

best,

surf
More...

Who cares. Money has no smell - a dollar is a dollar, regardless of who it comes from. If you can raise a few mill, and can trade, then you can run a hedge fund. The rest will be down to how well you do from there on.

PhD/quant = short gamma and/or easily replicable edge (by anyone else with quant skills) = eventual blowup or degredation of returns. The perpetual edges are all non-quantifiable, by definition.
 
You can have up to 35 non-accredited investors in the fund, which covers family members.

Quote from monty21:

Hi PFT,

I just had a question regarding your family members in the fund. Considering that they are your relatives, does that mean that they can invest in the fund without the normal financial rules for hedge funds? I mean like the 1 million net worth, 300,000 income a year for a household, or 250,000 a year income for individual (I believe these are the correct requirements).

So, did everyone in your family meet these rules in order to invest in your fund? Otherwise, are there rules where family members can invest in a fund even though they don't meet these requirements?

Looking foward to hearing from you...
Thanks a bunch
More...
 
In my personal account I did triple digits for 2 consecutive years then did the fund. I don't think I can talk specifically about the returns of the fund w/o perhaps breaking some sort of law so I'm going to err on the side of caution and say my returns in the fund have been less than in my own account with fairly mild drawdowns. I'm never looking to deliver eye popping returns, just slow, steady, and consistent.

Quote from thetrendfollowe:

Hi PFT,

Interesting thread.

Amazing that you got your hedge fund off the ground using unaudited results.
I didnt think that could be done.

Can i ask you a few questions please coz Im curious:
What were your returns like, what was your worst year, what was maximum drawdown (peak to valley percentage), and over how many years was your track record?

Thanks.

Nizar.
More...
 
The CFTC's De Minimis exclusion is 400k and up to 15 people, not including family members. Most states follow these guidelines. California is a little tricky. Before I became registered I did not accept any investors from California because they live in their own world out there. Once you're registered it's not a problem.

Quote from wenzi:

In starting a hedge fund, one should take a look at the blue sky laws in your state and the states of your investors.

You may or may not have to register as an investment advisor depending on the state and number of investors IF you collect a management fee.

Most states have a De Minimis exclusion for investment advisors.
More...
 
Great thread, Couple of questions:

1. What entity type did you choose for your Mgmnt co. & the fund itself (corp, LLC., etc.)??

2. What fee structure did you choose...2/20???
 
Very interesting.. your comment on NOT placing a physical stop. Can you explain your reasoning? How will you handle an onsite power loss or major catastrophy, if LONG?

Thank you for starting a wonderful thread.. the insightful comments are clear +concise!

Quote from ProfitTakgFool:

At any rate, if you want to dig a little deeper into my strategy here is a start. One thing I will tell you about it....I break a lot of rules and I will never place a physical stop:

http://www.elitetrader.com/vb/showthread.php?s=&threadid=112126
More...
 
I did an LLC, which manages the LP. I think you can do an LLLP that covers both of these bases with one entity.

I do a 1% and a sliding scale % of profits, which starts at 20% and slides up to 50% based on performance.


Quote from katz55:

Great thread, Couple of questions:

1. What entity type did you choose for your Mgmnt co. & the fund itself (corp, LLC., etc.)??

2. What fee structure did you choose...2/20???
More...
 
The reason I don't use physical stops is because I sell rising prices and buy falling ones and my timing just isn't good enough with this method to use stops. The darns things got hit right at the exact tops and bottoms of the market so I had to figure out another way.

I have a lot of backups on my system. Double internet connection, multiple pc's on the same platform, off-site pc access with a phone call, battery back up for the electrical system, house phone, and cell phone. It's not impossible to take me down but highly unlikely. Essentially, I'd have to lose both internet connections, my electricity, my battery would have to fail, my house phone would have to cut out and my cell phone would have to lose it's signal while WWIII is breaking out. Actually, my biggest threat is my broker going down. If I don't have a physical stop in and I can't access them by internet or by phone then I'm basically up the creek but thankfully that has never happened.

I do place a stop well away from the market so I won't get caught limit down. Hopefully that's my worst case scenario.

Quote from SH_DW:

Very interesting.. your comment on NOT placing a physical stop. Can you explain your reasoning? How will you handle an onsite power loss or major catastrophy, if LONG?

Thank you for starting a wonderful thread.. the insightful comments are clear +concise!
More...
 
I have a friend that has about $4mm in a bond portfolio and is willing to transfer them to the LP and let me trade on the margin. He doesn't want me to sell the bonds. And He wants the income but understands there could be losses.. He currently has the bonds in a brokerage account. However, I have some other smaller capital commitments from others. Is this wise or even practical?? He actually approached me, and I was unsure of how to answer. Any thoughts??
 
You must log in or register to reply here.
Back
Top