A new hedge fund, first and foremost, needs to raise investment. There are a many factors which differentiate a successful investment round from an unsuccessful one, not least the experience of the fund managers, and whether the proposed strategy is convincing. All funds however need to demonstrate best practice around their risk.
OK, so you’ve launched a fund. Now what?
A new hedge fund, first and foremost, needs to raise investment. There are a many factors which differentiate a successful investment round from an unsuccessful one, not least the experience of the fund managers, and whether the proposed strategy is convincing.
All funds however need to demonstrate best practice around their risk. In the past this was perhaps less of an issue, but that all changed in September 2008 when the willingness of regulators to exclude the buy side from the more stringent requirements of the sell side collapsed along with the market. In 2010, in the US, this became set in stone through the Dodd-Frank act. Now US hedge fund advisers with assets under management in excess of USD100 million (or USD150 million if a private client fund) are required to register with the SEC.
Whilst most startup funds are exempt at initiation, most investors would want to see that the new fund was well placed to address the regulatory hurdles as and when they applied. So, from the get go, a new fund needs to demonstrate the existence of a validated risk system
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