Negotiating a trading arrangement with a hedge fund

Discussion in 'Trading' started by bidask, Jan 12, 2008.

  1. bidask


    I was wondering if anyone has experience negotiating a trading arrangement with a hedge fund or trading desk. what is the typical arrangement? is it normally base + % of pnl or just % of pnl only?

    What are the numbers? Details please!:)
  2. bidask


    what's the typical percentage? please give some numbers.
  3. 2%/20%
  4. bt116


    No. The fund charges 2 and 20, the individual trader doesn't get that. It will typically be a salary plus % of portfolio profit as well as a discretionary bonus. Nowadays with the way traders jump around, they usually get some sort of guaranteed amount written in (but often it will be in a signing bonus). It ranges depending on the size of the fund, size of your portfolio etc.
  5. bidask


    do you have any examples with specific numbers?
  6. With the fund group we do the due diligence for it's 50/50; i.e., the trader starts off with 50% of the profit incentive fees charged. We do have the advantage of charging higher fees for certain traders/programs because of our relationship with this particular group (between 25% and 35%), but most funds usually don't want to charge more than 25% (at least from my experience).