![]() Third, you need to be part of an existing team at a hedge fund, asset management firm, or prop trading firm to have a good chance at starting a new fund. Second, results from “personal accounts,” no matter the account size, are not taken seriously. Your average annualized returns over the past 5 years were 15%, beating the S&P 500, which only produced 9%.Īs a result, you believe that you’re a good candidate to start a hedge fund.įirst of all, high returns on small amounts of capital (i.e., millions of dollars or less) do not mean that much. You might have a personal trading account with $100K, $200K, or even $1-5 million+. So, here’s why it’s probably a bad idea – but how to do it anyway if you insist: The Blunt Truth About Starting a Hedge Fund Not only has the industry performed poorly for the past decade, but fewer funds are forming each year, and management and performance fees have been falling for a long time. If you want to start a hedge fund, as of 2019, I’d say you’re somewhere in between “a bit crazy” and “total reality distortion field.” They fail to disclose starting a hedge fund is probably a bad idea.They fail to explain that “beating the S&P in your personal account” won’t be taken seriously by anyone and that it is not at all sufficient for starting a fund and.They fail to explain that only very specific types of people even have a chance of starting a hedge fund.You can find plenty of articles about “how to start a hedge fund,” but they all tend to make the same glaring mistakes:
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