Falcon are proud to announce that we have added our first Long Short Equity manager to our new First-Loss Model with a $10 Million allocation.
Falcon’s First Loss Model
Falcon will be able to offer managers with equity-based strategies, day one capital through our first loss basis model.
Our first loss platform is a collection of managed accounts where each account’s portfolio manager (“PM”) absorbs the losses up to a defined amount. The loss is absorbed by the PM posting an amount, typically 10% of their allocated trading capital, which can be thought of as collateral.
In other words, if a PM wants a $100m account from a platform then they are responsible for allocating $10m with the remaining $90m being allocated by the platform. In theory, this $10m first loss tranche protects the investors from losses of up to 10%, as negative P&L is allocated to the manager’s capital first.
Investors’ capital is only negatively impacted if losses exceed the manager’s $10m buffer. The managed account structure gives the platform the flexibility to pull accounts before losses of more than 10% are experienced, theoretically protecting investors.
In return for absorbing losses, managers are typically very well compensated, with up to 70% performance fees.
What we offer managers:
Falcon’s Customised Model
Falcon has the capability to customise capital raising models based on the portfolio manager’s and accommodate a variety of different strategies.
To find out more about Falcon’s Solution, please e-mail: info@falconfundsolutions.com
