Hi, after trading my own money and making a living for about four years, eventually I am going to managing other people's money ( at the same time when I am trading my own money). I am mainly trading stock index futures in East Asia . Before talking with the investors, I would like to know ,what is the popular rate of incentive fees in this industry. Thanks for any enlightenment.
Depending on your track record and rate of return. For good well-known hedge funds it is typically 2/20 (2% of assets, 20% of return per annum).
The initial invest amount from one single investor would be much less than 1 million USD, which is the threshhold amount of hedge fund investment. So at the current stage , it is only manaing other people's money, not a hedge fund.I do not collect manage fees based on assets value, only incentive fees when absolute return is positive , does that make a difference ?
Also does track records make a difference in incentive fee percentage ? For example, how much should I collect if my past performance is 40% annually, and what will be the percentage if I made 200% last year ? The potential investment is of about USD100,000
you could charge whatever you want as long as there's someone willing to pay. some funds charge a >40% incentive fee and no mgmt fee. there are multistrategy "funds" i know of that pay out PM/trader >60%.