my god to start your oWn fund is it possible?

Discussion in 'Professional Trading' started by chimera, May 22, 2013.

  1. chimera



    i lookd at the rules/laws and regulations on starting your own managed money fund......and it seems they are trying to actually kill the idea of anyone even thinking about it now.

    I understand after Bernie and the SEC complete incompetency they had to tighten things up....but haven't they now gone overboard on this?

    funds must spend 99% in compliance and 15 time trading these days.

    Are the big boys simply trying to kill off all the start ups?

    is the dream of running your own fund dead now? Still possible?

  2. chimera


    Put it this way, I can now see why they say unless you mange at least $100M it's not worth the effort.

    it's a bit "catch 22" for me though...I can't afford to just do that for a couple of years but I guess they won't like it if i do another side business at the same time?
  3. RedDuke


    It is not that difficult;t. Register as CTA and here you go. Under 400K you do not even need to register if I am not mistaken.
  4. chimera



    I trade stocks only......

    Have you actually done it or looked into it?

    thx anyway
  5. Yes, whenever you pool money, that's where the regulation kicks in and it's going to be expensive as well. A CTA structure is much simpler!

    Are you sure you can't trade stocks as a CTA?

    Check out
  6. RedDuke


    Yes we doing it. We only trade futures and options, so not sure about stocks.
  7. Pipflow


    It is very much possible to start with your own funds but for this we need to put in good effort and show the long trackrecord with good performance.
  8. It may be better to work at a fund first, before starting your own. After all, starting a fund is harder than just trading - you have all the business red tape to handle. Employees, regulations, investors, and so on. If you cannot trade profitably yourself or at a fund, you almost certainly can't do so running your own fund. Also, even if you can run a fund, you may do worse than working at a fund and just concentrating 100% on your own trading.

    So, IMO if you want to run your own fund, you will benefit from working at a good trading shop for 1 year for example. Experience, feedback, contacts, insight into investor expectations and behaviour, proven performance at an established firm - all these things will help immensely in starting your own place.
  9. nLepwa


    I run my own fund and I use it to trade client assets. I can share some insight.

    You have the onshore jurisdictions (USA, Luxembourg, Switzerland,...) and the offshore jurisdictions (Bahamas, Guernsey, BVI,...).

    In the offshore jurisdictions it is much cheaper to open a fund. They all more or less have the same business model as they all compete with each other. Of course you don't get the same service or the same passporting options when you go offshore.

    The rough figures for offshore funds are:
    1. You need $15Mio under management to cover your fix fees.
    2. Under $25-30Mio you will have a hard time getting banks/administrators to talk to you.
    3. You need $80-100Mio to operate comfortably

    You will need to pay (rough figures again):
    1. $50-100k to create the fund
    2. $15-30k/yr in taxes
    3. 1%/yr in administration fees
    4. 0.1%/yr in custodian fees
    5. $15-30k/yr in director fees
    6. $15-50k/yr in audit (depending on number of trades)
    7. 0.1%/yr in various administrative fees

    And then you obviously have brokerage fees (I pay brokerage fees as a % per year but that's because I have a limited number of trades).

  10. 1% per year in admin fee ? That's huge, all your mgmt fee goes into that pretty much ... Doesn't sound right .
    #10     May 24, 2013