You boys simply do not understand what it takes to run hedge fund business.
Firstly it is excatly that ..... a business. You've got investors, staff, regulators, partners .... You have to manage business risk like you would in any other industry. You've are responsible for alot of other peoples interests, and you want to grow the business over time and ensure you're still going to be around next year.
The second consideration is that a hedge fund has a stated strategy - convertible arb, long/short, managed futures etc. You chose your strategy and you have to stick with it through thick and thin. You change your strategy, even in a minor fashion, and most investor will bail immediately. Especially if you're in a drawdown. Institutional investors build their own portfolios and they invest in your fund becasue they want exposure to your style/strategy.
Gloabl macro managers (Soros, Kovner etc) are the one exception to the above rule.
The last point being that institutional investors are realistic about returns and are spooked by volatility. You disclose that you're seeking 100%+ per year and I swear you'll you won't raise a nickel of institutional money. They know it can't be done with any size over time. And 20% + annual vol will mean 95% of allocators will not return your calls.
Here's a challenge for you ... if you think you can generate a consistent 2% per month, with say only 1 down month per year (of a similar magnitude) with a billion dollars, for the next 10 years, then call me. We'll make more money than you ever dreamed of.
bolter
Firstly it is excatly that ..... a business. You've got investors, staff, regulators, partners .... You have to manage business risk like you would in any other industry. You've are responsible for alot of other peoples interests, and you want to grow the business over time and ensure you're still going to be around next year.
The second consideration is that a hedge fund has a stated strategy - convertible arb, long/short, managed futures etc. You chose your strategy and you have to stick with it through thick and thin. You change your strategy, even in a minor fashion, and most investor will bail immediately. Especially if you're in a drawdown. Institutional investors build their own portfolios and they invest in your fund becasue they want exposure to your style/strategy.
Gloabl macro managers (Soros, Kovner etc) are the one exception to the above rule.
The last point being that institutional investors are realistic about returns and are spooked by volatility. You disclose that you're seeking 100%+ per year and I swear you'll you won't raise a nickel of institutional money. They know it can't be done with any size over time. And 20% + annual vol will mean 95% of allocators will not return your calls.
Here's a challenge for you ... if you think you can generate a consistent 2% per month, with say only 1 down month per year (of a similar magnitude) with a billion dollars, for the next 10 years, then call me. We'll make more money than you ever dreamed of.
bolter
