 |
Chuck Krug
Registered: Apr 2006
Posts: 1407 |
08-08-12 10:31 AM
Hi everyone,
Have recently teamed up with a veteran futures trader and we manage a small futures fund and a system for a broker and his clients as well as our personal accounts.
Would like to use the knowledge of the people on this site to recommend us a trading firm that 100% backs traders for a profit split to expand down this path as well. Anyone know of any good firms like that. Location not important. Much appreciated.
|
| |
|
Edit/Delete • Quote • Complain |
Mike_McDermott
Registered: Apr 2010
Posts: 95 |
08-08-12 01:38 PM
We have a contact that might fit the bill.
Their goal is to fund emerging managers (small funds, CTAs etc) with a monthly profit split and monitor them for 12-18 months.
The group partners with a multi-billion dollar institutional allocator as a "farm club" to identify key talent.
After the 12-18 month period, the best managers are eligible to receive a traditional allocation (typically 2% management fee, 20% performance allocation) into their fund or a separately managed account.
The group does require the manager to put up some of their own risk capital - that's just the way their program works. It's a great way to boost assets under management (AUM) and begin working with an institutional-grade investor.
If you want more details, shoot me a direct message and we can chat...
|
| |
|
Edit/Delete • Quote • Complain |
JTG
Registered: Jun 2009
Posts: 33 |
08-08-12 04:29 PM
PM Sent.
Quote from Chuck Krug:
Hi everyone,
Have recently teamed up with a veteran futures trader and we manage a small futures fund and a system for a broker and his clients as well as our personal accounts.
Would like to use the knowledge of the people on this site to recommend us a trading firm that 100% backs traders for a profit split to expand down this path as well. Anyone know of any good firms like that. Location not important. Much appreciated.
|
| |
|
Edit/Delete • Quote • Complain |
Maverick74
Registered: Mar 2002
Posts: 17314 |
08-08-12 05:02 PM
Quote from Mike_McDermott:
We have a contact that might fit the bill.
Their goal is to fund emerging managers (small funds, CTAs etc) with a monthly profit split and monitor them for 12-18 months.
The group partners with a multi-billion dollar institutional allocator as a "farm club" to identify key talent.
After the 12-18 month period, the best managers are eligible to receive a traditional allocation (typically 2% management fee, 20% performance allocation) into their fund or a separately managed account.
The group does require the manager to put up some of their own risk capital - that's just the way their program works. It's a great way to boost assets under management (AUM) and begin working with an institutional-grade investor.
If you want more details, shoot me a direct message and we can chat...
These typically are NOT good deals for the trader. You essentially are asking them to leverage their OWN account to give you guys a risk free call. I know a lot of guys that do this setup. Ask the trader to put up 100k. Give them 1 million in buying power. If after 12 months they produce, you find them an investor. If they lose 10% of their strategy, they blow out. These guys are committing capital on a first dollar basis. The only way I would advise a trader to do this deal is if the losses are shared in equal proportion by the IB and the trader.
|
| |
|
Edit/Delete • Quote • Complain |
Mike_McDermott
Registered: Apr 2010
Posts: 95 |
08-08-12 05:16 PM
Quote from Maverick74:
These typically are NOT good deals for the trader. You essentially are asking them to leverage their OWN account to give you guys a risk free call. I know a lot of guys that do this setup. Ask the trader to put up 100k. Give them 1 million in buying power. If after 12 months they produce, you find them an investor. If they lose 10% of their strategy, they blow out. These guys are committing capital on a first dollar basis. The only way I would advise a trader to do this deal is if the losses are shared in equal proportion by the IB and the trader.
On the surface, I would agree with you. The leverage simply for the sake of leverage isn't worth the risk.
But in this case, the funding partner is backed by a multi-billion dollar allocator who is looking to fund traders from a more traditional standpoint (typically 2% management fee 20% incentive allocation).
The program is really just a "farm club" allowing the institutional allocator to evaluate the manager for a limited time period with minimal risk.
Other benefits to the trader include higher AUM (it's easier to raise additional capital when you already manage a material amount), and the credibility of having an institutional investor that has placed capital with you. Now the trader can go to a small family office and say that this institutional investor has placed $XX million into the strategy.
From a business standpoint, the methodology makes a lot of sense. Sure, it's not right for everyone, but for the manager who can control risk and generate consistent profits, it is a tremendous opportunity.
|
| |
|
Edit/Delete • Quote • Complain |
Maverick74
Registered: Mar 2002
Posts: 17314 |
08-08-12 05:20 PM
Quote from Mike_McDermott:
On the surface, I would agree with you. The leverage simply for the sake of leverage isn't worth the risk.
But in this case, the funding partner is backed by a multi-billion dollar allocator who is looking to fund traders from a more traditional standpoint (typically 2% management fee 20% incentive allocation).
The program is really just a "farm club" allowing the institutional allocator to evaluate the manager for a limited time period with minimal risk.
Other benefits to the trader include higher AUM (it's easier to raise additional capital when you already manage a material amount), and the credibility of having an institutional investor that has placed capital with you. Now the trader can go to a small family office and say that this institutional investor has placed $XX million into the strategy.
From a business standpoint, the methodology makes a lot of sense. Sure, it's not right for everyone, but for the manager who can control risk and generate consistent profits, it is a tremendous opportunity.
I understand the sales pitch. I've heard it many times and I'm not disagreeing with you on the benefits. But please verify for the readers of this thread, that their capital is first dollar risk.
|
| |
|
Edit/Delete • Quote • Complain |
| Receive
an email whenever a new post is added to this thread by subscribing
to it. |
|
|
|
|
