Starting a hedge fund

Discussion in 'Professional Trading' started by G_Morgan, Feb 10, 2004.

  1. Hello,

    I have plans to start a mutli-manager multi-style hedge fund. I am in the process of writing the business plan... operations, trading stats, etc etc.

    However, I have a question: How do I get capital for management? The fund will require several million in order to properly diversify and trade with acceptable commisions.


  2. 10 million is the bare minimum to properly operate a hedge fund and expect to earn a living. your initial capital is obtained from your personal contacts/ friends.

    best wishes to you,

  3. It has been my experience that individuals who start Funds-of-Funds have two primary skills: raising capital and (to a lesser extent) assembling portfolios.

  4. Surf,

    I have no rich personal contacts or friends. If I did, I'm not sure I would feel comfortable managing much of their money... I mean, 5% or so would be ok, but not much more. Not that I am not confident - just cautious.

    As for earning a living, I'm not very concerned with that. I'm sure that after a few years the fund track record would be enough to bring in lots of capital... no?



    That's unfortunate. I hate the finance industry :(. So many inefficiencies!

  5. sure, several years of track record will be great. however the track record needs to be with a substantial ( for an individual ) amount of capital, for anyone to take notice.

    best wishes,

  6. I think you might have missed the point. If you think you can trade but don't know how to raise capital (which is the impression I get from your posts), you would be better suited to starting a long/short fund and hiring a marketing firm to raise funds for you (or engaging a seed firm). If, on the other hand, you can raise capital but don't necessarily know how to trade, then the best plan is to start a fund-of-funds.

    Best of luck!
  7. What are the legal forms of marketing for a hedge fund?
  8. qtip



    I am familiar with Hedge Firms and Managed Accounts, but can you go into a little more detail of how Fund of Funds work. From you description, you don't have to be a trader, but a very marketer and sales person. Thanks in advance!


    Qtip :)
  9. A fund of funds is a hedge fund that allocates its capital to other funds instead of trading it outright. As you would expect, being a good trader is not as important to a FoF manager as being able to raise capital, evaluate managers, and construct a portfolio.


  10. see and these guys should be able to clarify some things for you.

    #10     Feb 10, 2004