Fabulous World of Hedge Funds
Leading investment professionals often leave successful merchant banks in pursuit of the increased investment flexibility and higher rewards that can be earned from independence and entrepreneurship, the following article you will know who are these men and women who decide to leave the security of large firms and set up on their own.
It would be a careless mistake to simply categorize hedge fund managers and private equity professionals as just the same as anyone else working on Wall Street or in the City of London. There are significant differences between an investment banker or a stockbroker on the one hand, and the men and women who establish and run alternative investment firms. These distinctions stem from the structure and operation of private equity and hedge funds, and need to be recognized in order to understand how these firms operate both internally and in the financial markets as a whole.
Private equity and hedge funds tend to be entrepreneurial businesses that are established as new and independent ventures. The process of launching a new fund is a complicated and risky process, as is the start of any new business. Whenever individuals trade certainty for uncertainty, there will be a lot of concerns and fears and doubts. All must be addressed. This process will inevitably draw out a number of issues concerning the future structure and operation of the fund management firm, as well as the proposed fund, including allocation of economic rewards (such as carried interest or performance fees) among team members; succession issues for senior team members; and documenting and calculating track records.Source: Forbes