Launching a hedge fund in 2019 hasn’t been easy, and several people who are either raising capital or have recently launched gave us an inside look at the process.
More funds have been liquidated instead of launching, and even the biggest funds are struggling to keep assets right now.
“General long-short equity can kind of be almost a dirty word,” one person told Business Insider, and new launches are better off with differentiated strategies that can help them stand out from the pack.
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Several people warned Greg Royce about the “rule of three” when he said he was planning to launch his own fund.
“It would take three times as long, and be three times harder than you originally thought, to raise a third of the capital you want,” said the former SAC Capital, Visium, and Citadel portfolio manager.
Royce is planning to launch Maximus Long Short Equity Management in a managed account structure next month. That’s a tough undertaking in the best of times, but even more daunting given hedge fund closures have been outpacing openings and startup costs are rising. More people may be looking to “seeders,” which provide a majority of start-up capital in exchange for a chunk of revenue once a fund gets going.
“It takes certainly a lot of hard work and persistence, and staying in front of people,” Royce said.
“I certainly don’t have all the answers.”
See more: Humans are beating machines, and Pershing Square and Greenlight are crushing it. Here’s how hedge funds performed in the first half.
For three straight quarters starting mid-2018, more funds have liquidated than launched, according to the latest data from Hedge Fund Research.
And investors are even leaving the most established funds, according to research from the law firm Seward & Kissel, …read more
Source:: Business Insider