Hi everyone! I am interested in starting an offshore hedge fund. The problem for me is that I, except from my education (still attending a university where I am studying business and economics), have no real experience. However, I have invested and traded on my own and I have recently developed a really interesting investment strategy. It is a quantitative investment strategy which I figure might help a bit due to my complete lack of experience. The backtests that I have done on the strategy shows that it would have significantly outperformed the S&P 500. And the goal for the fund would be to have a good relative return compared to the major US indices, not to aim for just a good absolute return. But, my question is, how can I raise capital to this fund? How can I assure potential investors that I can manage to run a fund successfully? And where do I find these investors? The only thing that I can say would contribute to my credibility is that I have taken and passed Swedsec licensing tests. I live in Sweden, and Swedsec licenses are usually required for financial analysts, fund managers, investment advisors and so on. Although I am not really familiar with the regulations in the US, but from what I have read I think our Swedsec license is equivalent of your Series 65 license. But anyway, how do you propose that I handle my situation? Is it still possible/realistic to find investors?
Buildup your experience/history/track record...and see where it goes from there you have to pass each small milestone first -- you're kind of thinking and assuming way too far into the future.
If someone were to come up to you and say: "I have a hedge fund", what would they have to do to give you the confidence your money won't end up in the toilet. Do those things.
I think every trader, definitely new traders dream about becoming a large hedge fund. Me to, but now i want a large account for myself, just trade my own money, nothing else to worry about, nobody calling you because you have a DD etc. If you seriously want people to invest in you then make sure you can provide a track record, i would say of at least 12 months, if you want large investors this wont be enough. And don't show a track record of a 10K account. You cant expect investors with millions to invest to take you serious if you only traded a 10K account. And don't go for the magic huge returns, instead make sure you get a nice steady return with a very low DD.
With that he should be busy at least a few years. When a good track record is available he can come back. Starting an offshore hedge fund is a challenge too. Most people see this too optimistic.
You need to prove that you can bring profit for investor by at least showing your past trading experience (myfxbook, trading history) and you could take participate in demo contest or small-fund competitions and beat all competitors. Another way, you can raise substantial funds with PAMM/Zulutrade system, where you can open a manager account and attract investor if you really can have a long-term growth performance.
One word: NETWORK. Go to F1 in Monaco, go to the top ski resorts, etc , follow the party circuit of the UHNW's ---- mingle , make friends, that's the key--- or you just might meet a few on elitetrader----- You just might make friends with a guy or gal whose family are billionaire hedge fund investors----- In my opinion, these other ideas are bull sh$t-- too much competition-- you need to DIY from the ground up-- trust me, it CAN BE DONE!
Use credit, its a business expense-- fly cheap, stay cheap-- hang in the bars and swimming pools/beaches of the best hotels, etc etc etc-- you can do this on the cheap and the potential payoff is astronomical. I should write a book on this-- You not gonna raise dollar one hanging with average/poor people-- and it costs about the same--and you get nowhere with these "funding sources" listed. A friend loaned his towel to a family of south american's at the ritz in miami-- they ended up buying 30 multi million dollar condos from him making him a millionaire many times over, another guy i know recognized a person getting out of a cab in Fifth in NYC-- and ended up getting over $35 million for hedge fund investment thanks to this single meeting---
And closer to home, he should get acquainted with the AP* funds, which are massive hf investors, and with the large Stockholm-based allocator that specializes in emerging managers.