HF with about $60m AUM

Discussion in 'Professional Trading' started by OTCkrak, Sep 16, 2010.

  1. I got hooked up with this shop that apparently has an index beating 5 year track.

    Apparently the fund was holding over 200 until a principal investor pulled out and started a new unassociated fund buying out some key employees.

    The new manager is basically starting from scratch but plans on running with the original record. I'm guessing it is a credibility issue, not exactly sure what disclosure is necessary here but its basically a new fund in the shell of an old profitable one. (is this normal/ legal?)

    The fund is multi market / equity long-short. I was interviewed for the position of research analyst intern. Actually I showed up hoping to be named partner :p but the internship title is a way for legalized slavery, and im fine with that because i dont have much expenses and im well aware of the doors this will open. BTW, this fund and position is located in Brazil. I am a US and BR citizen and I have a BA from a top 20 school in the US, work experience is limited to middle office IB.

    some questions for all the ET wizards.

    1)Assuming all the back office is outsourced, is it realistic to manage $60m, actually ~100m BRL with 5-6 employees? The dude explained that there will be 3 trader/ analysts, 1 risk officer, 1 sales person, and 1 intern/junior(me).

    2)if the admin fee is 2.5% am i correct that the firm will gross at least 1.5m in revenue? is it possible that the 2.5/20 only applies to new deposits and potentially all the AUM currently is owner equity and the firm may have no real revenue?

    3) is there any chance in hell that this fund balloons to over 1B AUM and I get rich in the process?
  2. Very realistic for a fund that size.

    It's not exactly revenue. It's for operating expenses. And if the fund does not make profits, that money is owed back to investors from future profits. You can view it as an advance against future profits so that the operation can have funds to pay its expenses.

    With a long-short equity strategy and "an index beating" 5 year track record? Highly unlikely. Beating the index over the past 5 years is not exactly anything to be proud of.

    You have a better shot getting rich daytrading equities.
  3. Funds, ESP mutual funds, are excellent at doing this - when you have a great record (in the past) but it's suffering currently you can pull all sorts of changes to keep that record so you can market it but basically start over. Past track records that are excellent are hard to come by so the fund companies will do anything to keep it and use it.

    You'll also see some big changes when the lead manager leaves and some new guy takes over - they will keep the old track record b/c it's still the 'fund's name' even though could be a completely new guy/team running it.

    Now if the fund was terrible, you'll see it die off or merge into another fund and that old track record somehow just dies off.

    Drove me nuts when I was a broker b/c you'd have to not only look at past performance, but see what the real story behind it was. Did a manager leave? Was this just merged from a more successful fund? Did they just get lucky 1 year of astronomical returns that is skewing the performance numbers? So much smoke and mirrors are done, esp w/ mutual funds.
  4. i signed up for this interesting little "mba program" down here that i didn't plan on doing but basically allows me to be employed by a firm as an intern.

    MBA - Capital Markets, as far as I know this program is not offered in any US institutions but I was actually intrigued and got me into the door to the job market down here. The program is basically a crash course in portfolio management but skips all the non finance stuff like marketing/ Organization Behavior .

    from the course time line below you will notice there are modules of Game I - Game IV... apparently every student manages a paper account and through each game can include additional instruments. Im not sure exactly all the rules yet I start next week M-T nights..The program director and professor is a "Princeton PHd" with experience in the BR central bank. So this isnt so mickey mouse. At completion there is a study program available at University of Chicago and I can only imagine showing up there as a "emerging markets equities analyst". fuck life is good

  5. Open your own shop. There are ready made entities out there ( hedge fund "platforms" ) - Cayman Islands, BVI, Bahamas, Switzerland, Liechtenstein, Luxembourg - with existing administration, legal services, back office facilities, risk management facilities, custodian bank ( if needed - you don´t need it for managed futures funds ).

    You just need a proper 2 year track record.

    You give up your sales efforts to an experienced third party marketing firm.

    Voila !

  6. If you do "well", you'll be bangin' Brazilian supermodel poon in short order. Take the job. :D

  7. You forgot one key component. Actual capital.
  8. ok.. i got the "job" and I start monday

    the salary is $750BRL/ month, or $110USD a week!!!

    not exactly slavery considering US HFs will offer non-paid internships.
  9. rubb


    How are you doing in this "job" right now, mate? Just curious as I am from Mexico and there are some similar things about this topic between Brazil and Mexico.