Tuesday, April 10, 2007

So you want to Start a Hedge Fund...

With all the press hedge funds have been getting recently, it isn't a surprise that 1,518 hedge funds launched in 2006 with about the same amount failing.

Hmmmm...let me guess why so many people want to be a Hedge Fund Manager? Maybe it is because the amazing returns that can be attained skyrocketing winning manager into the categories of the super-rich. "A $1 billion fund posting a zero percent return can still spread around $20 million to its employees. The best managers do a lot better than breaking even, mind you, and as a result, a handful of hedge-fund kingpins take home more than $500 million in annual compensation."

Unfortunately, because of these new entrants, average annual performance has been declining over the past fifteen years. That isn't going to stop investors from putting their money into new and old funds, funds of funds, and now the fund of fund of funds.

If you want to start your own fund, and you should want to, you can use a turn key site and pay around $60-80,ooo to set up. They also will help you when deciding how to find investors. You can also do a little more work and save some money by doing this whole process yourself. You need to set up a back office, a relationship with a prime broker, a good accountant and have a trading account. It also helps to have a good track record for the system you will be using to show investors what they are getting into.

Definitely Leverage Long Hedge Funds and being a Hedge Fund Manager. Except for Ken Griffin. If not careful, he too will go down like like Icarus.

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