How to split partnership for a CTA firm

Discussion in 'Professional Trading' started by chinook, Apr 9, 2010.

  1. trendy

    trendy

    OK, let's split the difference, and say 750k. I think you said you were working on a 2/20 arrangement. So, 2% of 750k is 15k. Say you hit your target and make a 20% return for your clients, that would be 150k, for which you would receive 20%, or 30k. So, at year end you and your partner have earned a combined gross income of 45k. Subtract your expenses, and you two would be better off asking people if they would like to super-size that order.
     
    #31     Apr 12, 2010
  2. LOL !
    Too true.

    But to be fair to the OP, the fund management business, like any business, takes time to build up.
     
    #32     Apr 13, 2010
  3. Ahh ... the static thinker that believes that businesses don't grow ... lol.

    Nothing wrong with not making anything the first year or as you say "would-you-like-to-super-size-that-order" money. Three or four years down the road when he's managing thirty or forty million (or more) the numbers can be quite real. Hey Bernie Madoff attracted a good deal of capital at less than 20% returns.

    He wants to manage money. He has a potential partner that says he can raise $1,000,000 for him. This is not a deal that requires a great deal of thought.
     
    #33     Apr 13, 2010
  4. Going from 0 to $40,000,000 in a few years is total fantasy land.

    I would certainly not cut the guy in as a 50/50 partner for the life of the fund, that would be insane.
    You should work a deal with him for a % of any profits for a limited time, no partnership and then after that time you can renegotiate a new deal or hire him as a consultant.
    This isn't exactly complex.
     
    #34     Apr 13, 2010
  5. You think the OP should not be happy to have this guy as a partner?
     
    #35     Apr 13, 2010
  6. I agree that it's definitely not easy going from 0 to $40,000,000 in a few years. However, I've seen it done --- the fund I worked at did those exact numbers in 1.5 years.
     
    #36     Apr 13, 2010