How does this usually play out with seeding?
I have a global macro strategy that a PWM office is interested in seeding ($10 million). They want to see six more months of live performance, so we haven't had any substantive talks about the structure yet. In the casual conversations I've had with them it seems like there are two possibilities. In the first, we charge 2/20 and they take 1% of the management fee. So I get 1/20. The second has me working for them.
I work in a small ($300 million) RIA, so hedge fund employment is new to me. What kind of offer should I expect if I go work for them? I'm thinking 1/10 (a 50/50 split of revenues) is fair. Also, which scenario do you think is more appealing? I have no desire to run a company, I just want to manage my strategy, so I'm leaning towards working for them if the offer is reasonable.
granted that they are going to support you with all the legal and compliance, including back office work, then i would work for them.
but then how would that be any different from you working for a multi-manager hedge fund? if you really have a strategy that stands out and if you are confident in it, i would actually shop around... theres a lot of money out there for large multi-manager HF that they are always looking to allocate. chances are they are more likely going to give you a fair market rate of the p&L.
Thanks for the feedback. I never thought about shopping around. I feel confident in the strategy. The PWM office looks at 200-300 hedge fund strategies each year. Mine is the second in three years they're looking to back.
As this is a new world for me, what's the typical way to approach a multi-manager? Is it customary to just cold call/e-mail? Also, what is the fair market rate of the p&l?
If they do hire me, what kind of compensation should I expect? It's only $10m, so I can't imagine it's too much fixed.
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