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Starting Your Own Hedge Fund

19-June-2017
19-June-2017 10:14
in General
by Benny Menashe

The challenges facing the next generation of emerging hedge fund managers are starker than ever,with increased barriers to entry caused by an ever increasing regulatory burden, coupled with the continued existence of a macro-economic environment impacting upon investment performance.

For most emerging managers, their survival during early years depends upon their ability to manage their cost bases efficiently and effectively. As part of management, comes the choice of the most appropriate jurisdiction for domiciling their fund vehicle.

Many emerging managers prefer to avoid the hassle of setting up a fund and go through all the long regulatory process usually by latching on to an existing umbrella as a great way to save a significant amount of time and costs. What's interesting is that these managers have commitments that wouldn't embarrass a medium size hedge fund, ranging from as low as $1mln to $200mln that are ready to be invested immediately.  

From the moment a budding investment entrepreneur dreams of launching his own fund to the month he crosses a critical mass in assets, not a day will go by when capital raising is far from his mind. Some of the managers are already operating under a managed account structure, but they are realizing that to raise capital in this competitive environment they will need to create the right structure that will allow them to attract capital from different types of investors. The best example is a manager that I came across who is investing close to $5mln of his own money for the last 2 years, he has the right investment process , results have been quite phenomenal, but he didn't have a clue as to how to market himself and how to attract capital to the strategy. On the other hand, another manager that I met started with the right structure initially with great performance and managed to reach in less than 2 years close to $100mln. Many emerging managers just want to focus on generating performance and not managing a hedge fund. This is where we comein and try to put them on the right track by creating suitable infrastructures.   

Still, using hedge fund incubators needs to be done smartly. You want to make sure you get the checklist of essential ingredients from the firm you are using for the regulatory umbrellas. At Falcon we try to provide a turnkey solution for our managers starting with the right infrastructure, helping them to create the right "package " to attract capital independently, as well as capital from our investors.

Ultimately the biggest challenge that emerging managers are facing is capital raising. We are a multi strategy hedge fund that are looking to add successful strategies to our offering, and by offering an umbrella, solution we manage to find quality managers that are still undiscovered. 

 

Falcon, is positioned to provide comprehensive services in compliance with FCA regulations; a full Regulatory Umbrella (MiFID/AIF):

  • Tier-one partners, an expert team, and the global expertise to cover everything from trading to back office, to legal and compliance
  • Set up in 3 to 4 weeks
  • Office Space- Falcon covers everything from secure 24-hour office access to IT, communication solutions and support, Falcon provides all that is expected from a modern serviced office and more
  • Set up a fund in Segregate Portfolio structure under Falcon Fund umbrella( Cayman, Luxemburg ) flexible to your terms and conditions
  • Use of our existing infrastructures, consisting of Compliance, Risk Management, Reporting and Auditing, Client On-boarding and Prime Brokers
  • Capital intro- Falcon has access to a pool of capital to introduce to appropriate trading strategies. This is an added-value service offered to selected Falcon clients.
  • Establish a track record & gain experience & competency whilst building critical mass

Advantages of using Falcon :

  • Time savings - FCA regulatory approval and preparation of fund and management company ( 8-10 months at minimum if you have the credentials) Our comprehensive solution takes 2-3 weeks maximum including FCA regulatory approval.
  • AIFM Solutions
  • Cost savings - instead of paying legal costs close to £100,000 with the umbrella you will pay much less
  • Co-branding capabilities
  • In case of a New Fund Launch – assistance with placing funds on major distribution platforms.
  • Capital Intro –  we have access to capital from different types of clients . If the Portfolio manager proves himself we can allocate a significant amount of capital for him to manage
  • If later on you decide to go on your own we can migrate your regulation to the new fund
  • Tax Efficient

 

Fees and contracts are flexible to meet your requirements. Please email info@falconfundsolutions.com to schedule more detailed discussions.

 

Falcon is a London-based multi-strategy investment manager, focused mainly in highly liquid global macro investment vehicles. Falcon's team consists of experienced managers and teams, deploying diverse set of strategy sets designed to extract value from market inefficiencies. From discretionary to systematic strategies , liquidity is a key driver in our funds.  Our clients are HNWI, Family offices and wealth management companies. We currently have committed capital close of $100mln across our different funds.

 

Disclaimer

The Material is for distribution to Professional clients and should not be relied by any other persons. The information contained herein does not constitute an offer to sell or the solicitation of any offer to purchase interests in Falcon Funds (the “Fund”). Any such offer or solicitation may only be made through the Fund’s offering and governing documents.