Start Up Hedge Fund London Based

Mr.K.K's picture
Rank: Chimp | 4

I am looking to start up a hedge fund or a managed account structure based in London (management). I have a few friends and acquaintances that want to give me money to manage on their behalf. What are my costs? anyone know any methods or structures that wont cost a lot as the start up AUM wouldn't be more then 1 Million. I have read quite a few books, and looking to meet up with a hedge fund legal structure firm that starts up small hedge funds under an umbrella. I'm negotiating with another investor who wants to acquire a part equity in the fund, this would really help getting of the feet with. Am i going about this the right way? I've been trading for two years now with a macro strategy long/short. Started of in FX but the risk where too high and i will probably be laughed at if i approached a big firm with 100 million + pitching a Forex strategy. If there's any other info you might need let me know.

Comments (8)

May 7, 2016

Starting a hedge fund can be very costly. Just the cost for legal paperwork and infrastructure would be enough to take away hundreds of thousands of dollars. Not to mention, cost for your office, employees (if any) and other costs add up. If you are starting a hedge fund, nowadays the minimum is around $10MM and the money you would make mostly likely go to cover the costs unless your returns are huge. I am not saying this to discourage you but also be realistic and be very careful with in what you spend money on. Good luck buddy.

May 8, 2016
tanvirullah:

Starting a hedge fund can be very costly. Just the cost for legal paperwork and infrastructure would be enough to take away hundreds of thousands of dollars. Not to mention, cost for your office, employees (if any) and other costs add up. If you are starting a hedge fund, nowadays the minimum is around $10MM and the money you would make mostly likely go to cover the costs unless your returns are huge. I am not saying this to discourage you but also be realistic and be very careful with in what you spend money on. Good luck buddy.

Predominantly agree, but the "hundreds of thousands of dollars" on legal costs alone - kidding right?

May 8, 2016
TheFamousTrader:

tanvirullah:Starting a hedge fund can be very costly. Just the cost for legal paperwork and infrastructure would be enough to take away hundreds of thousands of dollars. Not to mention, cost for your office, employees (if any) and other costs add up. If you are starting a hedge fund, nowadays the minimum is around $10MM and the money you would make mostly likely go to cover the costs unless your returns are huge. I am not saying this to discourage you but also be realistic and be very careful with in what you spend money on. Good luck buddy.

Predominantly agree, but the "hundreds of thousands of dollars" on legal costs alone - kidding right?

No. 300k+ is probably a good number. Just keeping a Cayman entity alive costs nearly 100k a year

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May 10, 2016

Thanks for the feedbacks, Much Appreciated, I have a few investors that are interested in part equity. As it's a start-up, we probably will have to go under another company and trade on a managed account structure. I've found it works cheaper unless i have 10 Million+ to keep alive and steady with my own off shore holdings. Most Guys on here are from the U.S, so legal work and regulations vary. What is the standard negotiations for investors and sharing equity in the business now days? Do you also offer share in revenue 20%-30%?

May 16, 2016

You can start it up for substantially less than 300k and there's no requirement to be in Cayman. However, I would strongly suggest that you go the managed account structure for a several reasons, I'll cover a couple big ones. Registration and regulatory requirements are much more lax. Second, your audit and admin... even if you get it absolutely dirt cheap will be 10-20k per year and probably more. Nobody who isn't close to you will invest without a reliable auditor and administrator. Managed accounts provide transparency where this is not needed. If you're charging 2% to manage it you're looking at 4% to BE before transaction costs and any other operational costs with $1MM starting. If you want more info PM me.

Jun 8, 2016

dtcorona , YOU SMART

Jun 9, 2016

Managed accounts, letters of direction etc. You're essentially a commodity pool operator.

Nov 11, 2017
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