Good luck with that.  If you aren’t starved out of business, I’m sure you will be shut down by the State.

yeah, seriously.

Plus you can only charge a performance incentive to accredited investors; who would gladly pay you anything you want if you have a proven edge.

And why a fund and not an index? What happens if Vanguard closes that fund - you going to start your 3 year time line over with another fund?This doesn’t sound very thought out.

Plus you’ll, shoot your eye out.

ravi -  not going to happen. 

Like WB said, you’ll likely be starved out of business.  Unless you just have a whole lot of money and contacts.  If you do, might I suggest opening a hedge fund.

And please tell me you’re not my cousin from Great Britain.  I already have an uncle in India who thinks that he is a “businessman” when really what he does is answer the phone when my wife has a problem with her Gap bill.

Just out of curiousity, what is your performance so far against VTSMX?

[quote=Moraen]

And please tell me you’re not my cousin from Great Britain.  I already have an uncle in India who thinks that he is a “businessman” when really what he does is answer the phone when my wife has a problem with her Gap bill.

[/quote]


He would have had to start with:

Dear good sirs:


(don’t all Nigerian scams start that way)

[quote=CALI123]yeah, seriously.

Plus you can only charge a performance incentive to accredited investors; who would gladly pay you anything you want if you have a proven edge.

And why a fund and not an index? What happens if Vanguard closes that fund - you going to start your 3 year time line over with another fund?This doesn’t sound very thought out.

Plus you’ll, shoot your eye out.

[/quote]

Thank you for the questions.

Index and fund are in the same general ballpark. It does not matter much - Wilshire5000 could work.

Here is why a fund is better:
Vanguard is investable. Whereas Wilshire5000 was not investable for long stretches.
Getting a daily price quote for Vanguard is pretty simple. Getting daily Wilshire5000 data requires subscription to pricing service.
Vanguard includes expenses. Wilshire5000 does not.

If Vanguard closes VTSMX (that is 18 years old), there are other equivalent funds that are investable.

[quote=ravi]
Getting daily Wilshire5000 data requires subscription to pricing service.


[/quote]
Dear Gentlemen:

ummm, it’s really not that expensive. Yahoo probably has it for free.

How are you going to handle trading costs? Custodian? GIPS compliant? You will need to pay an third party to audit the performance - that’s not cheap.

oh yeah, you still need to build a book first too.

Again, you’ll shoot your eye out.

Admin - this is why we need a CRD requirement on the new boards

[quote=Moraen]ravi -  not going to happen. 

Like WB said, you’ll likely be starved out of business.  Unless you just have a whole lot of money and contacts.  If you do, might I suggest opening a hedge fund.


[/quote]

Is there no market for pay-for-performance type product in the non-accredited client space?
It will be good to get some evidence to either substantiate or reject that.

Is there any reason to believe that only accredited investors (millionaires) will go for such an offering?

[quote=ravi]

[quote=Moraen]ravi -  not going to happen. 

Like WB said, you’ll likely be starved out of business.  Unless you just have a whole lot of money and contacts.  If you do, might I suggest opening a hedge fund.


[/quote]

Is there no market for pay-for-performance type product in the non-accredited client space?
It will be good to get some evidence to either substantiate or reject that.

Is there any reason to believe that only accredited investors (millionaires) will go for such an offering?

[/quote]

it’s the law

Is there no market for pay-for-performance type product in the non-accredited client space?
It will be good to get some evidence to either substantiate or reject that.

Is there any reason to believe that only accredited investors (millionaires) will go for such an offering?

Cut me a check for $15,000 and I’ll show you the law.

Sounds like something that should have been in Deliverance.

[quote=Wet_Blanket]Just out of curiousity, what is your performance so far against VTSMX?

In other words, you are a computer geek that came up with a program in his spare time, you back-tested it, and realized it would beat the index, and now you want to manage money?

[quote=B24]In other words, you are a computer geek that came up with a program in his spare time, you back-tested it, and realized it would beat the index, and now you want to manage money?

Your biggest problems are

non accredited investors don’t know what a CFA is

if the results are not audited and GIPS compliant, you will have a hard time selling those results to accredited investors. If you have 10 years of statements -get audited. However it may cost 300K

IF the numbers are real, AND you get audited -then you really should start a hedge fund. Why do you want to deal with 50k rollovers when you can make some serious money running a fund. You won’t have trouble getting AUM quickly

Lastly, is your strategy scalability. Or will is blow up once size is a factor? If not, hedge fund is the way to go.

There are many RIAs that have formed the hedge fund structure before the market crash, then never did anything with it. They will sell it to someone like you for about 15 grand. Saves you money and time.

Once last thing if you are serious. Attend your local CFA society events. Network and get introduced to a prime broker that will throw you a bone.

[quote=CALI123]

[quote=ravi]

[quote=Moraen]ravi -  not going to happen. 

Like WB said, you’ll likely be starved out of business.  Unless you just have a whole lot of money and contacts.  If you do, might I suggest opening a hedge fund.


[/quote]

Is there no market for pay-for-performance type product in the non-accredited client space?
It will be good to get some evidence to either substantiate or reject that.

Is there any reason to believe that only accredited investors (millionaires) will go for such an offering?

[/quote]

it’s the law
[/quote]

At the risk of getting into the details, Section 205 of Investment Advisers Act of 1940 says contract cannot provide "for compensation to the investment adviser on the basis of a share of capital gains upon or capital appreciation of the funds or any portion of the funds of the client"

Now, an equivalent structure is to set up a 2% management fee, portions of which will be refunded (voluntarily by the advisor) based on results. Refunds for performance are not contractually allowed. However, there has been an instance where SEC has allowed a client to receive partial refund for poor performance.

So, there is one precedence.  I have the thread the needle carefully.

That brings up the question of market potential. Any help would be appreciated.

<span =“ptext-2”>

[quote=CALI123]Your biggest problems are

non accredited investors don’t know what a CFA is

if the results are not audited and GIPS compliant, you will have a hard time selling those results to accredited investors. If you have 10 years of statements -get audited. However it may cost 300K

IF the numbers are real, AND you get audited -then you really should start a hedge fund. Why do you want to deal with 50k rollovers when you can make some serious money running a fund. You won’t have trouble getting AUM quickly

Lastly, is your strategy scalability. Or will is blow up once size is a factor? If not, hedge fund is the way to go.

There are many RIAs that have formed the hedge fund structure before the market crash, then never did anything with it. They will sell it to someone like you for about 15 grand. Saves you money and time.

Once last thing if you are serious. Attend your local CFA society events. Network and get introduced to a prime broker that will throw you a bone.

[/quote]

Thank you. That is helpful.
Where can I find out about such RIAs who have hedge funds that are dormant and might be willing to sell?

Good tip re:prime-brokerage. Thanks.

Be careful. Rebating one client is one thing. All of the clients is another.

AND check your state rules. Until you hit 25 mil AUM you fall under their guidelines not the sec.

There would be market potential - but as anyone here can tell you, those are not the clients you want. The will complain about every little ticket charge (unless you plan to eat them, which make you a wrap program, which means you need to give 15,000 to wet blanket), and most likely not stay with you for three years.

[quote=ravi]

[quote=CALI123]Your biggest problems are

non accredited investors don’t know what a CFA is

if the results are not audited and GIPS compliant, you will have a hard time selling those results to accredited investors. If you have 10 years of statements -get audited. However it may cost 300K

IF the numbers are real, AND you get audited -then you really should start a hedge fund. Why do you want to deal with 50k rollovers when you can make some serious money running a fund. You won’t have trouble getting AUM quickly

Lastly, is your strategy scalability. Or will is blow up once size is a factor? If not, hedge fund is the way to go.

There are many RIAs that have formed the hedge fund structure before the market crash, then never did anything with it. They will sell it to someone like you for about 15 grand. Saves you money and time.

Once last thing if you are serious. Attend your local CFA society events. Network and get introduced to a prime broker that will throw you a bone.

[/quote]

Thank you. That is helpful.
Where can I find out about such RIAs who have hedge funds that are dormant and might be willing to sell?


[/quote]

ask around, go to industry conferences, etc. I know a few guys who have just brought it up (but I am not suring their info to somebody I don’t know)

read Barton Biggs book Hedgehogging.