Depends on whether you are planning to serve taxable U.S. clients or international clients and tax-exempt U.S. clients (such as pension funds and university endowments). To start a U.S. fund, you need to form a limited partnership. Funds for international clients and tax-exempt U.S. clients are usually structured as corporations domiciled in convenient jurisductions (Caymans, Bermuda, BVI, Jersey, Guernsey, Luxembourg, etc.)
To start a serious fund, you need an auditor (and not just any auditor, but a specialist firm with an existing hedge fund practice), a legal counsel (in case of off-shore funds, two; one in the U.S., one at the fund's domicile), and an independent administrator. Needless to say, you are also going to need a prime broker, who will also serve as custodian for fund's assets.
Once all service providers are in place, you can have your lawyers draft a private placement memorandum and have it reviewed by auditor, administrator, and prime broker. Once the details are hashed out, you can start marketing the fund on your own or hire a third-party marketing firm to do it for you...
2006-11-29 14:20:33
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answer #1
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answered by NC 7
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First, you start a fund. Second, you establish a trading policy to employ hedging strategies.
Hedging could be simple. If you buy a company's stock, you buy its competitor's stock too. If you buy the top tier of profitable companies in an industry, you short the bottom tier of unprofitable companies in that industry (avoid those close to bankruptcy, sometimes you get unpleasant results if your shares are called into legal action--think Enron).
Hedging can be quite complex. The potential deriviatives to be employed can be staggering. Trading a range of option puts and calls and indexes of value, etc. Baron's Bank and other fine institutions have been bankrupted or nearly so by letting fringe leverage mechanisms get out of control. I've traded naked options, but there are ways in which those kinds of trades can really bite you if you don't manage them well. Sometimes, in those kinds of trades timing is everything.
Now if you want to make the fund public, and invite others to invest into your program, then you get acquainted with the laws and clearing houses. Relax, the regulations are just a tad bit less complex than your hedging investment program, assuming you would be using complex derivitives schemes. If you are using simple hedging, get ready for some real headaches.
2006-11-29 20:46:11
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answer #2
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answered by Rabbit 7
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You start a dummy business in a country that has no income tax or extradition treaty. Then you get rich people to sign on. Then you make your money any way you like then fold the company within a year if you deal with stuff inside the U.S. Since the money is in a foreign corporation, the IRS can't get their tax money so millionaires and billionaires can make their money tax free. Then you start a corporation under another name and start all over. That's how the big boys do it.
2006-11-30 01:28:59
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answer #3
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answered by gregory_dittman 7
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You have to first be a successful trader/investor, at least known by your family and friends to start a fund. If you do not have a reputation of success, no one will invest in your fund.
2006-12-03 15:45:03
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answer #4
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answered by koko 2
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Where? (Country)
2006-11-30 19:48:07
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answer #5
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answered by Anonymous
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http://www.turnkeyhedgefunds.com/
2006-11-29 20:37:08
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answer #6
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answered by Anonymous
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