How to raise capital for a Hedge Fund?

The secret is to be able to articulate your strategy in a way investors can understand, So that it is tied into the way things are heading.

When i was actively raising funds -- volatility was ramping higher so strategies involving increasing vol were hot for invstors. Also HFT was starting to gain traction --so being able to articulate these exciting (new at the time or novel approach) to investors worked to raise funds.

Raising funds for traditional long/short strategies would be near impossible imho with the tremendous competition. You need to set yourself apart.

surf

 

I love hearing this stuff, nice going!!

I parlayed my et contacts into millions in capital so u are doing the right thing. Get hot ideas at the conferences, link up with talent that needs capital, build a team, and do the deals with u in full control. Work your investors for referrals and you will be succesful. good luck! surf

 

But he says he does futures, options and stocks?! Would be better if he actually specialized in something and had a track record of doing it for a couple of years

 

Thanks again for good points!

To answer my own question, I guess it would be, to present/ articulate 1. the strategy must be unique (as you said - Set yourself apart); 2. meeting investors' expectations/ objective (beyond merely alpha returns); 3. matching investors' target of risk profile (as an hedge fund).

Also, a matter of confidence, and a bit of first sight/impression as well!

Comments (from anyone)?

 

Thanks, Surf. As a returning student after 20 years, I am not exactly fantasizing about Goldman's Analyst training program. Though, they once offered to make me the photocopy boy in a window less room.

I also had some pseudo market making scheme using excel spreadsheets. But, Bob anchored me back with industry realities as he does from time to time.

 

I think you nailed it. Unique strategy that matches the customer's desired risk/return profile.

You can get small fry with a complete MVO portfolio solution. But if your going to be labeled as a hedge fund, you better have a return profile that is either vastly superior in performance or has a unique fit within a sophisticated investor's allocation.

 

Are u talking about Mr. Bright as Bob? If so, one of the best ever.

 

Nope, Morse. Never got the chance to meet Mr. Bright but I may check out his firm one day, if a shift in the industry/market improves the prospects of day trading. Namely, some HFT regulations.

 

Ahh, i see. Thanks!

 

Thanks for the comment. I will check with my broker how the SMA works!