Why do 90% fail? 1. You have people who's only traded for 2-3 years, with a 1 year track record thinking they're good enough to start a fund up. Futures are OK. Equities... shady because of the current upward market. FX funds are definite. Sadly enough... less regulations, more failure. 2. Business / Legal issues (non-trading). High maintenance cost. Splitting partnerships causing they're own clients to move with them. Messed up marketers, 95% of rigged money and frauds are done by marketers. Money laundering and regulation issue. 3.... Traders not realizing this is a business and not accepting it. Obvious with the thread replies... no one talks about the business side.. 1. + 3. = 85% So my strategy would be have a solid fund business structure. "Most" of the investment bank owned hedge funds are shitty... but they manage lotsa money. Reason: Strong marketing and structure.
it is not nearly that complicated what most hedgefund/bank traders have that the average blowout day trader doesnt is a RISK CONTROL MANAGER and bigger limits. from my time as a broker/trader I know that the one thing that gets many to a point of not blowing out is a middle office guy having a word in his bosses ear. the above points that were made are important but simply having to be somewhat accountable to is a big step to not blowing up. cheers
"Most" of the investment bank owned hedge funds are shitty.... You are absolutely right : Goldman's Global Alpha Hedge Fund Falls 3.4% Since Start of '07 By Jenny Strasburg May 30 (Bloomberg) -- Goldman Sachs Group Inc.'s Global Alpha hedge fund fell 3.4 percent in the first four months of this year hurt by losses in the currency markets, according to a report sent to investors last week. The decline compares with the average hedge-fund advance of 4.9 percent, data compiled by Chicago-based Hedge Fund Research Inc. show. Global Alpha dropped 12 percent since 2005, when it rose 40 percent and attracted more than $3 billion of new cash.
excuse me ... but where are you getting the numbers that 90 % of HF fail ? in what time frame ? that statistic makes no sense to me just as the sheer number of HF's now out there makes no sense to me either nor the fee's they charge
One of the main points of "The Way of the Turtle" ==>> position sizing and risk control were major factors in their success.
We tend to be long "value" and short "growth" - when the market stalls or goes down, the "growth" fall quickly, while the value hold well. FWIW, Don
You have to realize that most HF's are simply attempting to "beat the Street" with minimal returns of 10-20% or so, not make a living for an individual trader. The fund makes their money on the 2% "management fee" - and if they happen to do well, they get an additional percentage. Sure, some do much better, but most don't in the long run. Don
We tend to be long "value" and short "growth" - when the market stalls or goes down, the "growth" fall quickly, while the value hold well. I am assuming that you are talking long term investment here. Are you running your long term investments on a fundemental basis or a technical (even perhaps systematic ) basis? Or a combination?
I think that most hedge funds are just looking to rake in the easy management fees without taking much risk, so their goal is just to keep growing assets under management. Why risk a blow up to earn 50% to end up earning nothing once your investors are gone, when you can kick back and relax, earn 10-15%, and collect management and incentive fees, which still add up to a nice hefty sum. That's what I would do.
Our "family portfolio" actually consists a couple hundred pairs at this point. We actively trade when it's called for, based on pre-determined profit points, while keeping the rest intact until the pairs "mature" - which is a point where we feel there is no longer any more potential profit to be made. We look to make 36%. Don