Managing own money under HF name

Hi,

i've got a kind of dumb question: I have accrued a substantial amount of money and wanted to open my own fund but realised that even with the amount of money acquired the costs of opening a fund are simply too high yet and I dont want to put my whole capital into a fund yet

So i thought about joining a hedge fund to have access to their resources (Bloomberg etc.), where they let me manage my own book with my own money and in return if they like my performance I manage some of their clients money in addition for a small salary ??

I honestly have 0 knowledge about the HF industry and thought maybe some of you guys working there could give some insights if that would be outright rejected or could be interesting for some since they really only would offer their resources they have to have anyways..

I know stupid questions but at this point I'd be glad to get any kind of input.

Thanks!

Comments (28)

May 19, 2021 - 7:37pm

Are you asking if you can just bring your own money to a hedge fund to use all of their resources? You're asking if you can test strategies using their resources and office space/networks and if you do well with your own money then you want to manage their clients? Think from their perspective what do they gain at all from allowing you to do this? They have dozens of qualified analysts/PM's ready to lateral or manage money for their clients. You would be outright rejected, actually, you most likely would be laughed at and not responded to at all. Is this a troll post?

May 20, 2021 - 2:30am

im not interested in their strategies. I'd work remote too, im mainly interested in stuff like Bloomberg Terminal. What do they have to gain ? Maybe a Analyst/PM that outperforms their current hires with no monetary risk.

Anyways, it was just a stupid idea I came around but had zero idea what would likely be the response. But probably your response will be the standard response it seems like. I'll ask a few funds tho to see for real.

Thank anyways!

  • Investment Manager in HF - Other
May 20, 2021 - 8:40am

What do you mean an analyst that outperforms the current hires without monetary risk? How is that helpful to the fund? You will be a cost, 100% negative to their bottom line and if you outperform they will get 0 of that because you aren't managing their money. A fund will either hire you and give you money to manage or not, they won't hire you and give you access to all of their resources with 0 upside to them. 

May 20, 2021 - 10:13am

I dont see how I add any cost since I would be using their Bloomberg they are paying anyway so in no way im adding any cost to them. And what I mean that yes, they also have 0 upside, but their upside essentially is e.g. if I outperform their analysts and PMs it would make sense for them to hire me and pay me what they are paying their analyst/pm that performs worse than me IF that would be the case - thats what I ment. So they could be getting a better analyst/PM than they have right now. Anyways, I appreciate your input and thanks for that - it seems to be a controversial topic for HFs apparently. I will reach out to some and see what their answer is. Thanks again!

Most Helpful
May 20, 2021 - 11:24am

Dude, you just sound entitled this whole post is ridiculous. Tldr you're saying you have a ton of money and want to leech off all these hedgefund resources and feel entitled to them because you've made a lot of money trading a bull market and don't like working at your own job. You want to use all of their expensive resources and see if you can yolo 3.5m around so you'll never have to work again and if you end up doing better than you feel the PhD/quant/established analysts/PM's should have done you want to offer the "privilege" to the hedge funds of being able to work with your great brilliant mind. Do you understand how entitled and stupid that sounds? 

The fact of the matter is if you even have the mindset that one good year with your brilliant mind should mean an analyst/PM gets replaced clearly shows you have no experience in the industry of trading. Everyone is working towards progression and consistency and a single good year for someone and a single bad year for someone else rarely have any correlation to future performance - especially at the top.

  • Investment Manager in HF - Other
May 20, 2021 - 12:54pm

Bloomberg terminals are $20k per year. 
How are you going to place the trades? Your Robinhood account? Are you trying to minimize your transaction costs or not? Are you trying to get access to markets that are difficult to trade on a platform like Robinhood? Etc etc

If they give you a Bloomberg and you have any sense of a contract with the firm (I.e. I get a job if I make X) then they incur costs on legal and HR. If they don't do that then they basically have no upside as you can just walk. 

None of this will work with any established HF

Just go to a prop shop where you put up your own money and use their resources. 

May 19, 2021 - 8:06pm

homeboy you sound bitter - even making $3mm by giving out handies in the parking lot is pretty legit

Big4 Audit --> TMT L/S

  • 1
  • Associate 3 in PE - Other
May 20, 2021 - 1:13pm

Bloomberg users require individual licenses that run $20-25k per annum. Basic subscriptions and licenses for your average HF seat add another $25-50k per user, not counting any 'alternative' data. Why would any HF shell out ~$50-75k in annual license fees, not to mention legal and HR expenses, for you just so you can trade your own capital?

  • PM in HF - Other
May 20, 2021 - 1:31pm

You can get reuters or Bloomberg on your own its not that hard. You just agree to pay them upfront. Your whole post makes no sense though, you have $3mm after tax apparently why do you need a firm's resources? 

I assume you want outside capital...no firm is going to give you outside capital in this sort of setup, maybe a family office but that is not outside capital typically.

  • Associate 1 in IB-M&A
May 20, 2021 - 1:59pm

I actually can't believe the post. You can't just show up to a HF and use all their resources to trade your own $3m. This is not your school library. You're saying the cost is too high for you to start on your own. You can't just make them pay for your stuff. Every HF pays people to achieve one objective - generate profit for clients. If you are not doing that, you are of no value to the firm.

May 20, 2021 - 2:03pm

Strategies run by HFs are more targeted towards institutional investors than to individual portfolios. 

As a result, it would be very unlikely for them to incorporate an individual investor running their own book into their environment.

On a separate note, it's possible that you'll be able to find the data you need from sources other than BBG for a cheaper price.

May 21, 2021 - 2:10pm

Yes you can do something like this but only if you have personal relationships with a PM or exec at a small (sub-750MM) fund or prop trading firm. I've seen arrangements before, usually called "carving out a pocket for a solo trader/PM". Also, for the idiots on this thread, Bloomberg has two licenses -- per user and per terminal. Most funds have shared terminals (paying per terminal) for most jr-mid level staff, so there is no incremental cost of you using it -- but you're sharing the terminal. Using the firms trading desk is probably a different story, but if it's a sub-750MM firm then they likely don't have specialist traders (or maybe just 1). 

Again, this is unlikely unless you have good relationships with those fund managers/execs. 

  • Research Associate in HF - Event
May 21, 2021 - 2:18pm

who shares terminals unless you are in banking or at a very small firm (at that point, they all use factset anyways)?

Jan 9, 2022 - 1:45pm

I think this is actually a smart idea. The hedge fund is leveraging their fixed costs (essentially the guy would be at zero cost if he works remotely and not accepting any salary, and finances own trade costs), and benefits by being able to monitor their returns and work product to see if he can become a star (the returns would have to be phenomenal). Sure he is obviously taking advantage of ER reports, bloomberg, etc. but it could be a win win scenario. 

  • Research Analyst in HF - Other
Jan 10, 2022 - 12:33pm

Quas harum totam earum ut quisquam reprehenderit dolorum omnis. Est exercitationem autem impedit qui nihil non. Qui labore consequatur quis qui.

Vel non quia inventore commodi. Vitae ut nostrum est provident sed. Rerum in excepturi possimus dolorum ex consequuntur ad.

Start Discussion

Total Avg Compensation

January 2022 Hedge Fund

  • Portfolio Manager (8) $1,718
  • Vice President (20) $488
  • Director/MD (11) $434
  • NA (5) $306
  • 3rd+ Year Associate (21) $288
  • Manager (4) $282
  • Engineer/Quant (54) $252
  • 2nd Year Associate (28) $241
  • 1st Year Associate (66) $189
  • Analysts (201) $166
  • Intern/Summer Associate (17) $122
  • Junior Trader (5) $102
  • Intern/Summer Analyst (218) $83