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

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marsman

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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?
 
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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.
 
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/Down...erlaubnis_buba.pdf?__blob=publicationFile&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/KVGenInvestmentfonds/Hedgefonds/hedgefonds_node_en.html (english)
http://www.bafin.de/DE/Aufsicht/KVGenInvestmentfonds/Hedgefonds/hedgefonds_node.html (german)

.
 
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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 !!!
 
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 :)
.
 
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marsman said:
. . . 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.
Click to expand...
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.
 
@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...
 
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marsman said:
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.
Click to expand...
Hi marsman,
:LOL:
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.
 
@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"
:)
www.youtube.com/watch?v=oohFGOmcxuo
 
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marsman said:
. . . 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...
Click to expand...
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.
 
Why don't you join one of those public trading sites like zulu trader where you make money off others following your trades
 
@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.
 
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forker said:
Why don't you join one of those public trading sites like zulu trader where you make money off others following your trades
Click to expand...

I have no experience with such a thing yet. But thx, I'll take a look about what is possible there.
Can you tell more about it? Have you made practical experiences with it?
 
You link your trading account to the site and people can see your performance. If they like then they follow your trades through the automated service and you get paid for them doing this. The more people that follow you the more money you make. I have never used this service before so can't tell you much else about it. It should give you the public credibility you need to start a fund after some years on this site because you can use it as a source for providing a track record.
 
forker said:
You link your trading account to the site and people can see your performance. If they like then they follow your trades through the automated service and you get paid for them doing this. The more people that follow you the more money you make. I have never used this service before so can't tell you much else about it. It should give you the public credibility you need to start a fund after some years on this site because you can use it as a source for providing a track record.
Click to expand...

My picks are part of my edge as I make use of outliers etc., therefore I can't disclose my trades because otherwise it (the underlying and its strikes) would became "saturated", and then no profit would be possible to make anymore for anybody... I mean the kind of profits I'm primarily after, ie. some extraordinary profits...
So, it's not for me.
 
Nobody sees your entry criteria and frankly speaking, people won't be able to back engineer the criteria from an entry. How many technical indicators are in existence and how many fundamental indicators are in existence? The cartesian product of possibilities including accounting for configuration parameters... They have more chance of being struck by lighting several times in the same day
 
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