How to start a small investment fund (hedge fund)?

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Old Aug 21, 2016, 12:49pm   #1
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How to start a small investment fund (hedge fund)?

What licence and how much capital at minimum is required for registering an internationally available investment fund (ie. a hedge fund for trading equities and indices, not real estate etc) in the US or EU?

Last edited by marsman; Aug 21, 2016 at 12:53pm. Reason: typo fond vs. fund...
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Old Aug 21, 2016, 12:52pm   #2
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Did you mean hedge fund as opposed to fond ?
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Old Aug 21, 2016, 12:55pm   #3
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Originally Posted by Trader333 View Post
Did you mean hedge fund as opposed to fond ?
Ops, yes, "hedge fund" I mean
(in German it's called "Hedge Fond" :-)

I fixed the typo, I hope so.
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Old Aug 21, 2016, 1:00pm   #4
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marsman started this thread I mean where investors invest into the hedge fund, and the hedge fund tries to make profits by investing and trading these investments.
Ie. it is not about managing/trading individual portfolios of other people.
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Old Aug 21, 2016, 1:22pm   #5
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marsman started this thread Update:
In this german document of the German BaFin (the FinTech watchdog in Germany, ie. the "German SEC" I think):
http://www.bafin.de/SharedDocs/Downl...cationFile&v=1
minimum requirements of 25k, 50k, or 125k are mentioned. I'll need to sort out what they mean in detail...

Further links:
http://www.bafin.de/EN/Aufsicht/KVGe...s_node_en.html (english)
http://www.bafin.de/DE/Aufsicht/KVGe...onds_node.html (german)

.

Last edited by marsman; Aug 21, 2016 at 1:37pm.
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Old Aug 21, 2016, 1:41pm   #6
 
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Apparently folks....I am about to be cut off at the knees for having the temerity of offering Traders an additional income stream...c'est la vie, quel damage, et tant pis !!!
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Old Aug 21, 2016, 1:58pm   #7
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marsman started this thread Hi Kevin,
thx, but we already have an IMHO good trader, it's me , and we don't need the services of other companies,
we just want do it all ourselves. And we don't trade any bonds as we aren't specialised on that.
We (me and my trading partner, as unlicensed & unregistered privates yet) just need to form a legal entity for finding more funds, therefore the idea with a hedge fund.
The goal we have is big, we can't/won't wait 5 or more years to reach this goal.
That problem is solvable in a much shorter timeframe only by using more funds...
I can just repeat my by now maybe famous example to illustrate and justify that point of view of ours:
30% of 10k is 3k
30% of 100k is 30k, ...
Ie. as said elsewhere, even in this case size really matters
.

Last edited by marsman; Aug 21, 2016 at 3:14pm.
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Old Aug 21, 2016, 3:31pm   #8
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. . . I can just repeat my by now maybe famous example to illustrate and justify that point of view of ours:
30% of 10k is 3k
30% of 100k is 30k, ...
Ie. as said elsewhere, even in this case size really matters.
Hi marsman,
Whilst I can't fault your maths, your assumption that the returns increase pro rata in line with the size of the initial investment is incorrect. In other words, the larger your initial pot is then, generally, the smaller the return. It's an inverse relationship so, if you're as good as you think you are, why not start off small and build up equity as quickly as you can? For the sake of argument, if you can turn your £10k (or whatever your starting pot is) into £100k over a 2-3 year period, then you'll have an enviable track record with which to attract investors. Show people what you can do and the applications to your fund will flood in. Establishing a solid track record doesn't require much money: so size really doesn't matter at all.
Tim.
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Old Aug 21, 2016, 4:23pm   #9
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marsman started this thread @timsk, thx for the tips, but as said our goal is very ambitious and time-criticial.
For example to become each USD millionaires within 6 months, and the 2nd milestone is to have each at least $25 million within a year, and 3rd milestone is to become each a billionaire within 1.5 years.
With more funds these goals would be much easier, faster, and also comfortably to achieve.
Ie. our goals are absolute numbers, not relative to the funds used...
Btw. these milestones are not linear or exponential or whatever, they are just as they are...
And: more funds would mean more profit for ourselves, as it would mean more leverage... It depends on the agreement with the investors, but of course we cannot let people participate in the success of our method w/o taking any fees; nobody would do such a silly thing. And when taking fees this means the above said more leverage for ourselves... simple maths...

Last edited by marsman; Aug 21, 2016 at 4:56pm.
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Old Aug 21, 2016, 5:19pm   #10
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Quote:
Originally Posted by marsman View Post
thx for the tips, but as said our goal is very ambitious and time-criticial.
For example to become each USD millionaires within 6 months, and the 2nd milestone is to have each at least $25 million within a year, and 3rd milestone is to become each a billionaire within 1.5 years.
Hi marsman,

Apologies, I thought this hedge fund idea was serious. Plucking ridiculously large telephone numbers out of thin air is sheer fantasy and will never happen. I wish you well with your project but, based on what you've said, in six months time I think it's more likely that you'll be stacking shelves in your local Lidl than to have reached your goal of being a USD millionaire. I'd love to be proved wrong, but if you're not prepared to put in the work necessary to be seen to be serious and credible, then no one will ever give you a penny. Investors don't care about your goals and what you want, they care about not being conned into a Ponzi scheme or similar, not losing whatever they invest and, hopefully, making a better return than conventional investments allow. Unless and until your can offer all the above, you'll get nowhere.
Tim.
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Old Aug 21, 2016, 5:32pm   #11
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marsman started this thread @timsk, some people have moderate goals, and some others have some aggressive goals...
To each his own and for me the most, or something that...
Most investors are glad to have a profit of 5% per month (or 80% p.a.). I can deliver this easily, the rest of what I really make would be mine... I think there is nothing wrong or unethical in such a win-win business agreement...


'Cause I know what it means
To walk along the lonely street of dreams
An' here I go again on my own
Goin' down the only road I've ever known
An' I've made up my mind
I ain't wasting no more time"


Last edited by marsman; Aug 21, 2016 at 6:02pm.
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Old Aug 22, 2016, 7:19am   #12
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Performance numbers of Hedge Funds

marsman started this thread FYI:
Here are 3 very interessting tables about the performance of professional hedge fund firms:
http://www.barrons.com/public/page/9...rformance.html

As can be seen, 20% p.a. is a hard to achieve good number for them.
My above said 80% p.a. is even a top number very hard to achieve for them...

.

Last edited by marsman; Aug 22, 2016 at 7:31am.
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Old Aug 22, 2016, 8:23am   #13
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. . . As can be seen, 20% p.a. is a hard to achieve good number for them.
My above said 80% p.a. is even a top number very hard to achieve for them...
Hi marsman,
You can't compare your results with those of an actual hedge fund for the very reasons I explained in post #9. If you had tens - or hundreds of millions - to manage then you're only going to achieve 20% p/a too. And that's if you're half as good as you think you are. If, after a year or more, you can produce fully audited accounts with all the key stats: profit ratio, success ratio, max drawdown, risk per trade, trade expectancy, MAE / MFE, Sharpe ratio etc., etc. then you may (note emphasis) have something that will be of interest to investors. Until then, you're just wasting everyone's time, mostly your own.
Tim.
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Old Aug 22, 2016, 8:37am   #14
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Why don't you join one of those public trading sites like zulu trader where you make money off others following your trades
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Old Aug 22, 2016, 8:40am   #15
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marsman started this thread @timsk, I am researching for finding the right form of firm and licence etc. I'm looking for people who aready went this road and can tell me from their experience.
I don't think I waste my or anybody else's time. Everybody not interessted in the thread can simply skip/ignore it.
It is my understanding that only same-minded people should discuss an issue.

Last edited by marsman; Aug 22, 2016 at 8:46am.
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