From Trader to Hedge Fund Manager
CHP program who are opening their own hedge funds and we have been providing some advice to them about how to do so.
Here is a short list of some actions to consider taking if you are looking to move from being a trader to a hedge fund manager:
- Think about forming your team early, as Jim Collins recommends in his book "get the right people on the bus, and then figure out exactly where that bus is headed." The team is really what is going to bring in the capital, protect the portfolio in rocky market conditions, and continually improve your investment process and risk management techniques
- Start learning everything you can about capital raising and hedge fund marketing ASAP. The faster you start moving up this learning curve the better you will be able to manage third party marketers or capital raisers you hire for your team. If you wait until you have a big track record you will be left trying to manage someone doing work you no nothing about, or you will have to start at the infant stage of hedge fund marketing knowledge when you should be in your prime for raising capital.
- Form a board of advisors early who have experience in growing funds past the $100M level, pay them or reward them in ways that will keep them around long-term. Their advice could save your business and help you make it over the hump to profitability.
- Take your new hedge fund serious as a small business, you are not running a portfolio you are running a portfolio.
- Half of running a hedge fund is risk management and portfolio construction, the other half is capital raising and marketing, invest accordingly.
- Explore hedge fund seeding programs, early stage investors, wealth management firms, fund of hedge funds, and incubator funds before launching your fund and after you have been up and running for 6-12 months.
- Be as transparent, pro-active, professional, process-oriented, and organized from day 1 as possible.
- Interview at least 3 service providers face-to-face that you will be partnering with, these are your business partners and you will need to lean on them for advice and help. These professionals can make or break your business.
- Learn everything you can before launching your hedge fund, this is a knowledge-based industry and learning one valuable lesson before making the mistake within your own hedge fund first could save you $10,000 or $100,000 in wasted time or lost funds.
We also train dozens of traders and new hedge fund managers a year within our Certified Hedge Fund Professional (CHP) program, check it out here.