7 Hedge Fund Manager Startup Tips

Hedge funds, more than 1,000 times a day on blogs, newspapers, magazines and radio stations are mentioned on. At the end of 2011 there were over 9,000 hedgefunds in existence in 1113 with starting this year, according to Hedge Fund Research. In this article we will explore the reasons why these funds continue to be popular and what you should consider before you take your own hedge fund.

Why Start a Hedge Fund?

There are many reasons why starting a hedge fund of the new American dream.Here are some of the most popular:

• Almost everyone has the news of the few hedge fund managers who earned over $ 1 billion a year in sequence to read their funds.
• To grace the cover of the hedge fund mainstream media newspapers and magazines on an almost-daily basis.
• The mysterious and exclusive nature of hedge funds has a draw, compared to many other areas of finance and investments, which sometimes seem trite.

With a bit of capital, it is relatively easy to start a hedge fund. However, the implementation of risk control, growing assets, hiring of staff and the organization to operate as a profitable business while generating positive performance, very demanding.

Failure between 4 and 10% of all hedge funds or close each year, and countless others have begun half, abandoned or in private investments for friends and familyre-designed. This is not to say that starting a hedge fund is a bad idea, but it is important to recognize that it is a very difficult task - one that can be approximated necessary with the same long-term prospects for running a business must.

Tips for hedge fund start-ups

If you start a hedge fund on-set, there are dozens of factors that will determineyour success. Here are seven tips or important areas of your new business that you should think through and be aware of before shows all potential investors orpartners, your business plan for your fund.

1. Competitive Advantage

Their hedge funds have a competitive advantage over others on the market. This can be a marketing advantage, information advantage, trade, or resourceadvantage advantage. A marketing advantage could be close to career-longrelationships with hundreds of high net worth investors and family offices. An example of a resource would be beneficial if it for a large asset managementcompanies that would like to invest heavily in launching a hedge fund.

2. Strategy definition

Some hedge-fund start-ups underestimate the importance of a clear definition of their investment strategy of the fund.

• What is your strategy, and how you will define and explain your investment process to create your own team and first investors? The development of a repeatable, defensible and profitable investment process after taking the costs of running a hedge fund account can be difficult.
• Ideas that were not tested (or have been backtested only) in the real markets do not hold much water with investors and advisors, the hundreds of would-be hedge fund managers look to one years.
• It will help you to do some hedge-fund performance research, if you do not already have and know which strategies are currently doing well, what can not, and whythis happens.
• Are you starting your fund at a time when your strategy is in very high demand, orhas the pendulum in the opposite direction at the moment?

Start building a list of other hedge funds that run the same strategy as your business and conduct competitive intelligence on them as much as you are able,ethically and legally.

3. Capitalization and Seed Capital

It is important that your new hedge funds are well capitalized. Need to manage the amount of the assets of your fund to be profitable will focus on three things from:

• Team size
• Investment Partners
• Unique cost structure

Some hedge fund managers maintain profitability with less than $ 10 million in assets under management, while others claim that you are managing to $ 110000000-125000000 $ in assets to be considered a serious company with some long-term prospects for survival . The number is probably somewhere in the middle, but everyone is unique and performance fees, you can see some big gains with relatively low asset levels.

4. Marketing and Sales Plan

Like any business, nothing happens until a sale is made. It is important to a customer order plan for raising assets before you open your doors for business to develop. One of the first steps to decide to be there, where you can try is to increase assets. There are many possible sources of investors, including:

• Seed capital providers
• Family and Friends
• High Net Worth Individuals
• Financial Advisor
• Wealth Management offices and RIAs
• Single-and multi-family offices
• Fund of Hedge Funds
• Corporations
• Foundations and endowments,
• Pensions
• Sub-advisory relationships

Small hedge fund start-ups usually try to develop long-term relationships with seed capital providers, family and friends and high net worth individuals (directly or through a financial advisor). Working with institutional investors could invest $ 25 million after all the quality to $ 100 million at a time can be difficult to a two-to three-year track record and more than $ 100 million in total assets under management have.

To complete some simple marketing and sales activities and to create before the start of your fund are:

• Newsletter
• Website
• Two-page marketing piece
• 20-page PowerPoint presentation
• Professional Logo
• Letterhead
• Business
• Folder with logos for presentations

Many of them are 101-type business details, but they are often overlooked or poorly executed. Who can really help grow your business sees hundreds if not thousands of hedge fund managers each year, and for them it is easy to see that the managers have invested their time and effort and have something thrown together at the last minute. All marketing and sales materials should be under the direction of your chief compliance officer or compliance consultant be made because there are many limitations and details that need to be tested and evaluated.

5th Risk Management

Risk management is an important piece of the puzzle in the execution of a successful hedge fund. Your company must deal with a specific and competitive way to manage both business and portfolio risk, or you'll come off as not serious about your business or long-term growth objectives. There are many consultants and consulting firms that do nothing but advise on hedge-fund portfolio and operational risk management issues.

6th Compliance and Legal Assistance

Hire large legal advice should be seen as an investment. An experienced hedge fund lawyer can help you avoid pitfalls and build relationships and invite you to networking events such as private capital introduction dinner. It also shows others in the industry that you invest in your own business because you want to be in the business for the long haul.

7th The decision for the Prime Brokerage

Many start-up hedge fund managers underestimate the importance of choosing a prime brokerage firm that can act as a partner for their business. The Prime Broker is such an integral part of how your hedge fund is to act and operate, you should take several weeks or months to evaluate your options and weigh the costs and benefits of doing business with the various companies you will meetwith.

Usually it is wise, a prime brokerage team is very motivated to serve your needs, but not so small that they can not physically meet all meets your trading and prime brokerage needs. While the capital introduction services can be a great thing to offer for your prime broker has to know that they often help nine-to 12-month-balance to a minimum before they can do a lot for you also consider start-up capital his sources. Once your team has proven to be a good prime broker will help make introductions when you high performance and a solid team behind the portfolio going forward.

The Bottom Line

Starting a hedge fund is a challenging undertaking, a multi-year commitment to refine your strategy, build a team, and the search takes both trading and marketing niches where your business can operate profitably. While many hedge funds fail, before they are large enough to be viable businesses, according to the above tips help you save time and gain some early momentum in the marketing of your portfolio to be.

Read more »

How To Become A Hedge Fund Manager

Becoming a hedge fund manager certainly has its advantages ... If you are successful. The king of the hedgies is currently John Paulson, who work in £ 1 billion a year raked shorting the subprime market and others are not bad.

Can you do it?

The answer to that question is yes and no. Just as it is possible to be a sports star for each. If you have the right of physical fitness, mental strength and commitment, you can get to the top of your game, and of course, there is an element of luck in everything.

The first thing to know about hedge funds is what they are. There are many resources on the Internet, which will go into chapter and verse, but the simple explanation is that in general, a hedge fund set as a company, let's call it XYZ Ltd, which is set in a tax efficient jurisdiction such as the Cayman Islands or BVI, for example.

The company (it may have more), usually two classes of shares are a management-shares (so you own the company) and the remaining shares are investors shares (to carry no voting rights).

The company is about different services such as:

Prime brokerage: Prime brokers offer a range of specialized services for hedge funds. Current services include the handling of trade execution, clearing and settlement, financing and technology services, risk management and operational support equipment, securities lending, and make introductions to capital.

Fund Administration: Some hedge hedge funds conduct administration internally while others choose to outsource certain functions such as accounting, investor services, risk analysis and performance measurement functions to a third party administrator. Some outsourcers offer independent pricing strategy of a fund's portfolio securities.

Custody: Hedge funds are typically a custodian bank, including cash in the fund and the actual securities. Custodians may also control the cash flow margin calls to meet.

Of course there is also a manager of the fund will be. Suppose you are the one who observes, set up the fund that would be you.

This all sounds a bit complicated, but there are many administrative services that this set-up was put together for you for around $ 70,000.

The structure is not the problem. Getting money into the fund.

Suppose you have set up a fund, you have even managed to get himself a fund management company is properly licensed, you are ready to go as a new fledgling hedge fund managers. Problem now is that you have received money in the fund and that's where your problems begin.

The ongoing fees from your administrators above are payable on an annual basis so that your head is there. Cover such overhead costs will be the charges, contact your fund. The fees are now the notorious '2 & 20 'meaning that there is a 2% annual fee and 20% of the profits.

Suppose your overhead costs are £ 100,000 per year, you will be at least £ 5mn into your fund will need for the annual fee to cover your overheads. In any language, that a large chunk of change. To obtain this, you need potential investors that you know what show you're doing.

Sarah Butcher, editor of eFinancialCareers.com agrees. "You can not just be someone from the street and set up a hedge fund," she says. "Investors want their money to someone who has a track record, very much."

When speaking with investors, you need to be able to show them your power and the strategies you use. Obtain this experience is the key.

Go the traditional route, you will train to either an investment bank or directly with a hedge fund company. Investment banks are looking for someone with a good degree, perhaps in math or physics, they want someone who is tough minded, a quick learner and someone who has taken the ability to make trading decisions based on sometimes complex structures.

Find your way directly into hedge funds can be tough, they are notoriously secretive. By far the more tradional route is by working as a trader at an investment bank.

So if the boat as far as it will have a new boy missed in an investment group, are your dreams for a hedge fund trader?

Not quite. The thing about dealing with money is that people are looking for performance. If you can demonstrate a track record of performance then people will want to invest money with you. They clearly have the capacity for the enjoyment of the stock market, so you probably have to buy and sell shares, but you need to know more about other market-based instruments such as futures, etc.

You can do this by opening an account with a reputable retailer and downloading to do their trading system. They will trade ideas and explanations behind them, and they will help you do your portfolio to business operations similar to what the hedge funds. If you immerse yourself in this type of trading, so that profits at its own portfolio, then you are creating a track record. If you are successful enough, then you can to the point where you think you have the ability to get to start a fund.

We're not saying it's easy, it's certainly not, but not not as a 20-year-old with a first from Oxford necessarily limit your potential career as a fund manager. It's a long dry spell to get someone to believe that you are credible but the rewards are there when you get to this stage.

The Billionaire Boys have spent years perfecting their art in most cases and now have the ear of the huge amounts of money, but do not give up becuase you can not work in an investment bank .. remember "money follows power."

If you want to be seen if you have what it takes, there are several platforms that can be downloaded free of charge and test your abilities. This online trading system is something to think about whether you can dive.

Read more »

What is the Future of Euro?

Prior to the summit in Brussels last week turned into a crisis of the European Union, it was meant to solve the crisis of the euro. How did score points in this primary task? The answer is: badly. What emerged from Brussels is an agreement to reduce the structural defects that failed to secure € threaten to destroy. Yes, in many cases, the drive these deficiencies make it worse. The best that can be hoped now is that the European Central Bank, the paper over the cracks, which keeps things in place until next March, the Summit. The worst thing that can realistically imagine remains bleak. And is certainly not a veto to protect David Cameron and Great Britain from the economic damage.

Last week, meeting of European leaders was to take the eighth place this year.The comprehensive package, which came out in the end, was the fourth since this January. And yet it is only a very small step forward. The analysis of the crisis in closing statement on Friday presented the same record as put Angela Merkel and Nicolas Sarkozy have in the past two years, played since Greece coiffed first admitted his budget figures. This is essentially: This crisis is the fault of some southern European countries, who have played fast and loose with their treasuries. The solution offered is largely the same, also to sort the bad guy forcing countries, their public finances, and give them some cash to keep them afloat. This is economics as a moral story, and it is continued in the current match.It's the boneheaded rules that each country must lead a balanced budget (as if not, the public sector to respond to a recession in the private sector) and is the threat of "automatic effect" for any government, the foul of the rules. Picture Tony Soprano reincarnated in Frankfurt and you're not a million miles away.

But that economic analysis of the foundation only limited importance for Greece - and no help in dealing with Spain and Ireland, the two break-ins come from housing and credit bubbles, rather than wasteful governments. And yet, even as the crisis rolled up to the borders of France and Belgium, the euro club has stuck to this story. The only thing that has changed is the size of the emergency loans from the few tens of billions to the debate a few years ago at a fundraising target of € now one trillionth Can throw European leaders as many zeros as they want and they will not sound convincing. What is now needed is a coherent plan that covers the short and the institutional and economic. In the short term, the single currency club must hope that the European Central Bank following their signals from a few days, stopping at the purchase of government bonds of other nations struggling to raise cash. But this is a very short-term solution. Voters in Bavaria, we say, not to cheer on their central bank to keep blowing up their balance sheets to Mario Monti in business.

The ECB is to act under so much pressure because it is the only meaningful inter-governmental institution that the euro zone can call their own. The result, according to a recent pamphlet from the Centre for European Reform, neatly puts it, is that Mrs. Merkel and Mr. Sarkozy is relying on rules, because they do not have institutions. At the end of the Euro zone will need to create their own continental version of the IMF - albeit with a more rational approach to fiscal policy as a body of Washington. This means that a common European treasury, with the key funding from Germany and others. But it also means setting different rules for how to manage persistent trade imbalances. At the moment, the old D-Mark block effectively a trade surplus, while southern Europe is in constant deficit. This must be reversed. Is that plausible? In economic terms, yes, politically, it is certainly much more difficult. But the alternative is a breakup of the euro.

Read more »