Futures quant fund
Hi! I am looking at options for starting a quant futures fund. Wondering if I should go out and form my own Master feeder structure or get under a larger fund as an incubator? Looking to build a track record with a small pot of around $250k and then seeking private individual allocations. Also suggest the best jurisdiction other than Delaware-Cayman Master Feeder. Also how to look for partners? I am a Bachelor's student. Along with running a startup fund. Thanks
with that small amount of $$...you should just open a trading account with interactive brokers, and trade your $$ for 1-2 years to build a track record. Interactive Brokers provides a nice summary of your account performans...and can connect to FundSeeder (for free), which you can use to shop your performance stats looking for investors.
I've already connected my trading account to Fundseeder. My trading account with IB is under my LLC, I was wondering if I should form the LLC-LP structure already and open the account under the LP, to directly build a auditable track record and be ready to take in outside investors when the time comes.
no...the extra cost of creating these structures is a waste...what you need is a track record of trades...and that doesn't need to be under the optimal hedge fund corporate structure...it just needs to be under your name.
But you must be trading real money...even if its just 1 futures contract...not paper trading.
what are other services similar to FundSeeder that are good? It's an interesting idea. I am wondering if there are competitor / peer services to this.
also does it show potential investors your actual trades or just the summary statistics? if it shows the actual trades i would be a bit hesitant to just show that to the world.
there really aren't competitors. Collective2.com is the closest
its fine to show your trades...that does not flesh out your strategy
Definitely forget about any of the fund structure stuff for now. Just build your track record. To get serious investors on board you'll need two things:
1) Live trading performance for 2 or more years that matches up with a longer (5 years) backtest.
2) An interesting story/rationale behind the strategy that you can explain to investors. This is subtle but you've got to be able to explain the risk premium that you're capturing. Keeping this a secret doesn't make you look clever and you don't want investors who don't understand your strategy because they'll be the first to bail in an inevitable rough patch of performance. You'll also have to convince people that your strategy works at scale - what works at 250k may not work with millions of dollars behind it.
Investors will have different requirements for legal structures so it really doesn't make sense to pay all the legal fees for a particular one right now. My advice is to be patient and focus on developing and implementing the best trading strategy you can.
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