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I've been ruuning a hedge fund for 20 years. The type of client depends entirely on size. Most funds start small with friends and family money. Some start bigge
by pnetherwod 2y ago
I've been ruuning a hedge fund for 20 years. The type of client depends entirely on size. Most funds start small with friends and family money. Some start bigger like ex prop traders. Before the Volker rule many traders worked for banks known as prop traders (proprietary). The Volker Rule stopped that but prop traders thar had built up a decent track record could leave the bank and set up a fund and take they clients with them. Many of these would be banks clients which include HNW and family offices. Typically any fund under $100m under management would not have big institutional clients like pension funds. Fund of Funds (FOF) used to be a big part of the business but less so today. They used to reply on the fact that due diligence was hard and access limited. It's not the case today. So sub $10m is mainly the managers own money and friends and family. Sub $100m you may some HMW and family office and possibly a FOF. Post $100m you can start to attract interest of some of the more adventurous institutional investors. After £500 you're definitely in the institutional category. Institutions don't want to invest in small managers because they need to invest in size otherwise is not worth their effort but they also don't want to be your entire assets either hence the minimums. Once Institutions start coming in in size then asset levels can really accelerate as the aren't that many funds that are very large so they have a limited choice. So what type of client to have is entirely dependant on your size. In fact it's more dependant on your size than your returns. In the early days to have to be a bit racy to generate the interest. As soon as to get bigger to need to calm things down a bit.
- vmsp 2y agoHow does one get into the investment business?
- beezlebroxxxxxx 2y agoThe comment you're replying to laid it out pretty clearly if you want to be a part of a hedge fund (as I interpret your question.) Know friends and family with money (a lot, hopefully) or, more commonly, have institutional connections. Have at least some connections and experience in finance/banking/investing (at a large scale, not small-fry stuff). Bring the two together with a lot of marketing and promises. If you want to work in IB, then you basically need to go to a feeder school or have connections. The investment business is a lot of "look, we have the smartest people in the room to handle your money, trust us." They rely, like consulting, on selling the prestige of their employees education and social capital. You will sign on to working absurd hours, with the promise of making a lot of $$$ if you can survive (literally, a guy died this year at BofA).
- smabie 2y agoWorking in IB isn't related at all to actually making investments / trading though. If you want to trade your best bet is apply for roles at prop shops and funds and avoid banks entirely
- mtillman 2y agoInternship at a fund/CTA/market maker/wholesale bank. If older, go in through an ops position. Don't spend time at a retail bank.
- pnetherwod 2y agoIt depends what you want to do. Portfolio manager and quant research roles are rare and highly competitive but other roles in risk, ops or compliance are more common. It's an insiders market for sure.
- JumpCrisscross 2y ago> Volker Rule stopped that We were renamed market makers and carried on for a bit.