Hedge fund or money management firm

Discussion in 'Risk Management' started by sectrader, Nov 28, 2005.

  1. Hello,
    I want to move beyond just trading my own account. I am doing it for 3.5 years. 1st year - 150%, 2nd - 50%, 3rd year - let's say about 30% .
    Ideally - want to start hedge fund. Problems I can't solve:
    I live in California. If I start money management I need to register with California. If I register with California - I can't take performance fee from non-qualified investors. So, I don't see how I can start hedge fund. I have 1 qualified investor I know and his starting investment will cover 10% or so from hedge fund startup expenses. If I were permitted to get up to 35 non-qualified investors - I would start since I can get some non-qualified friend and family to invest with my fund.
    Since I trade mostly stocks - CTA does not work for me.
    OK, may be I can do regular money management without performance fee - I know, I think, a lot about investments.
    Clients open accounts in Interactive Brokers or other brokerage - I get power of Attorney and ask for 1 percent or about management fee. In this case I will use all my knowledge and experience, except primary system - I trade non-liquid staff for my main system. My problem in this case - I don't know how to start money management firm.
    I found some books, advice, web site for financial planners - but financial planners send clients to money managers. I would prefer to be money manager myself. I've ordered books how to start financial planning business - but it does not look like it makes sense for me to go exactly to this route.
    Going to work to brokerage firm does not make sense either - I am making more than starting brokerage firm employee.
    I would appreciate any advice about hedge fund startup or how to start money management firm.
    Thank you.
     
  2. you dont have to register if you manage less then 25 million to my knowledge
     
  3. Another idea, start a LLC corporation and make all your investors partners. Just an idea, probably not allowed though.

    http://www.turnkeyhedgefunds.com/faq.htm

    Or

    Under Regulation D, a hedge fund can accept up to 35 non-accredited investors. However, Rule 502(B) requires that hedge funds offered to non-accredited investors have certain adequate financial statements. - not sure if the new registration rule makes this obsolete

    There are some managers who do ok for themselves charging only a 2% management fee to investors out of state, and the managed money in their home state has a 500k minimum.
     
  4. ib fa account is perfect for this. you dont take control of the money so you are exempt from most regulations up to 15 clients.