Establish a Hedge Fund

Q & A: Establishing a Hedge Fund

Question: What does it take to launch a hedge fund? If I am hard working and determined I believe I can start one. As long as I never give up I will succeed right? How can you help me?

Answer: I get this question fairly often. There are many misconceptions about the hedge fund industry, two which are that all hedge fund managers are filthy rich and that most hedge funds are large entities manging billions of dollars. The truth is that hedge fund managers are paid well but most do not earn tens of millions of dollars each year - and only a small percentage of the total firms manage over a billion dollars of capital. To start a hedge fund you need:

• A deeply experienced team
• A repeatable investment process
• A business plan
• A competitive advantage
• Business risk management measures
• Portfolio risk management tools and techniques
• Capital to run the business on the first 2-3 years
• A compliance consultant or legal advisor, etc.
  

Launching a hedge fund is not much different than flying in some ways in that will power alone will not lift you off the ground. You must seek the appropriate resources, ensure you have enough capital to run on and you almost always have to operate as a team.

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