To anyone with actual hedgefund start up experience

H

HotTip

If I wanted to trade in a separate account in order to have audited performance for marketing to outside investors, do I have to create an incubator in order for an auditor to evaluate my results, or can I just set up a separate account (joint account with my partner)? Do auditors or outside investors really care if you have an LLC or incubator in order to give any credence to your trading results?

Sorry to limit this question to only people with actual HF experience. I just didn't want this to be a forum for people with just a notional idea to throw in their two cents.

Thanks in advance for any input!
 
Quote from HotTip:


Sorry to limit this question to only people with actual HF experience. I just didn't want this to be a forum for people with just a notional idea to throw in their two cents.
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You post a request for information on a public board and yet try to limit responses to fit YOUR needs? Good luck with that.

BTW, you have no idea what you are doing just based on the question you asked.
 
Quote from HotTip:

I just didn't want this to be a forum for people with just a notional idea to throw in their two cents.
More...

If you are paying for the advice, then you have the right to state this. But trying to control the responders who are furnishing free advice, that is a little bit of a low request. I had a few thoughts, but not to those with a bit of an attitude problem.
 
Audited track record means exactly what it reads. You'll need a reputable accounting firm to audit the trading results. If it fits your purpose, ask the firm of your choice of they'd audit a brokerage account.

People set up an "incubator" because they want to have a continuous track record. Namely, when (and if) they attract investors they continue trading in the same investment vehicle and the performance of the incubator straightforwardly adds to the performance of the full-blown fund. Without an incubator fund, the performance record of the newly formed fund will start from zero, i.e. in half a year the fund will have only half a year of performance and the trading account performance will be half-a-year old (assuming the trading account is discontinued in order to fund the hedge fund).

What Stockta says is all true. Also, larger institutional investors (such as funds of funds) are concious of scalability and won't look at a fund unless the track record is with sufficient capital, say $100 mln.
 
Sounds like you are in over your head but send me a PM if you are interested in info. Opinions vary on this board, my experience is on the institutional end with the end investor being essentially retail. My guess is that my numbers & requirements would be 2-3 times higher than most others opinions on ET however most on ET do not have the same experience.

If you have a track record trading you should be able to put up $10-50k at a prop firm. If you have a track record at a prop firm and aspirations of hedge funds someone there should be able to help you.

Start small - hedge funds aren't all they are cracked up to be.
 
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