We offer you the opportunity to set up on our fund platform HFH SICAV plc or set up a stand alone fund in Malta, Luxenbourg, Dublin, Cayman, BVI or Mauritius. We also set up US feeder structures.
We consistently work with clients who become the best in the world such as current top global performing fund Runestone Capital Fund hosted on our fund platform HFH SICAV plc amongst many other great clients. We understand how to deliver the right solution to the most demanding and meticulous of managers and how to guide managers starting funds for the first time. In this we are second to none and we have the testimonials and tarck record to show that. We are available always and we deliver on time to the highest standards. Our clients expect and deserve no less.
We are start up fund experts, many of our senior team are profiled in the press, sit on expert panels for Bloomberg, the Arab Financial Forum and others. What does a start up fund expert mean - this means we have spent many years working hard wirh counterparties such as administartors, auditors and banks to get the best deals and knowhow for our clients and to cater to the challenges that start up funds face in terms of setting up cost wise and operationally. We work with funds of all seed sizes, the minimum seed level is USD500,000.
We work with all startegies from equity long-short to private equity to some of the really innovative funds such as luxury car funds and creative funds that make us sit up and think Wow!
One of the key reasons we work with and retain clients who go on to become some of the best managers in the world is because we are there on call for them, we share risk with them, we ensure they are cost effective and we bring options and ideads to the table. We can act as COO, legal advisors and operational experts. We bring in marketing opportunities and we push clients into the larger window and connect them to networks globally. HFH has never been a paper pushing firm, for us, it is all about the extra expertise and genuine interest we bring to the table. Your success is why we are here. And we know success, we know what it takes.
Thinking of starting a fund, new or additional? Contact us and speak to one of our partners for an in-depth free discussion on your busines plans and what we can bring to the table and how we beat the options you have.
Email: firstname.lastname@example.org - we repond within 24 hours.
What do I need to set up a fund?
1. Management company -v- self managed structure. Contrary to what managers are often advised, you do not always need a management company (manco) to operate a fund or before hedge fund set up. The market has evolved and you can now use a self-managed fund structure where the management team are appointed as officers of the fund. This means you do not need to spend time and costs on a management company. HFH will advise you on the options and you decide what works for you, understand the pros and cons of the various structures and jurisdictions.
2. Track. Before starting a hedge fund, you need a track record or relevant qualifications for the assets you will be trading. How long a track, if any, is required depends on your background and qualifications. You can create track post hedge fund set up and a hedge fund is good vehicle to create a track in as you can list on Bloomberg and Reuters and being to showcase your peformance.
3. Seed. You need to meet regulatory minimum capital requirements for a fund and these usually have to be met shortly after hedge fund set up and before you can operate. Fund minimum capital can be low, e.g. EUR 125k for a malta fund in the EU. This money can be traded/ invested. However, strategies differ and you should seed with an amount that makes sense for your strategy.
It is not unusual now to see hedge funds set up with seed as low as $1mn or even $500,000 in order to create a tarck record and show potential investors they are committed to and believe in their business. If you chose to create a tarck record in a fund you should ensure the operational costs do not affect your perfomance to the extent it looks worse than it is. In such cases you should structure to pay operational costs externally to the fund to avoid affecting track record. This expenditure can be reimbursed.
Additionally, a single manager in a $10mn fund can earn more than a 6 person team in a $30mn fund. Consider whether the size of your team makes sense for your seed and the impact of operational costs on performance.
4. Upfront Costs. You need to cover the initial set up costs such as legal; the fund can be structured to reimburse you.
5. Risk. Every business is a risk, a fund is no different. A fund gives you a real product to market and shows your commitment to investors in a way, a managed account or paper track does not. There is no guarantee any fund will succeed but getting the strategy, support and structure right will help in bad times. If you can live with the potential downside (losing costs, time, reputational risk and possibly having to close a fund) then you are on your way to being an entrepreneur! On the upside most managers love running their own fund. We have seen clients start funds with a couple of million that reach circa $50mn AUM in 3 years. Not every fund does but it shows there is more to success then a large seed at the outset which may disappear quickly if results are not forthcoming.
Should I start with a managed account?
Whether you should start with a managed account or go directly for hedge fund set up often depends on your investors and seed available. Managed accounts are less transparent and scaleable and your fees may come after a bigger whack of tax. You cannot list a managed account on Bloomberg or Reuters etc for track record and you cannot usually control exits of investor funds. In addition some investors may not be willing to move to a fund or for you to use their accounts to showcase your track record. A fund is generally a better option for a manager provided they can meet the hedge fund set up criteria. As funds are now more cost effective than they have every been, managers should carefully consider the pros and cons of fund verses managed account, noting a credible track record is king.
How do I get regulatory cover?
When your hedge fund set up is completed your fund will be regulated in the relevant country. However, as a manager of a fund you also need to be authorised to manage a fund in the country you are located in; if you have a self-managed fund (where the management team sits directly as officers of the fund with no need for an external investment management company) then you are automatically approved to trade the fund in the country the fund. There are a number of factors to note:
1. A management company can cost as much or more than hedge fund set up and takes time to set up which your investors need to be comfortable with e.g. setting up an investment management company in the UK can take 6 months or more. You also need to meet regulatory capital and operational costs of a management company and ensure certain officer positions are filled.
In choosing where to set up a management company, considerL set up time, tax, regulatory environment and costs (establishment and operational). The EU allows you to passport your management company while being regulated and taxed in your home state. Countries like Malta have a 5% effective rate of tax for management companies and you can passport into the UK or other EU state. Operational costs are competitive and set up time is relatively quick 2-4 months. EU managers should carefully consider pros and cons of all relevant EU jurisdictions before you set up.
2. "Regulatory umbrella cover" is regulatory cover you hire from a third party for a fee. This can cost up to £3-4,000 a month in the UK. Be careful that your regulatory cover provider does not push you into setting up a management company. You are under no obligation to and you should carefully read terms as this is common. It is advisable for small seed funds to set up self managed funds and see out the first year before they consider setting up a management company. HFH has access to private regulatory umbrellas and can cut costs for qualifying clients by up to 75%.
HFH also has counterparty relationships with brokers who can provide FCA regulatory cover for clients who have funds or intend to undertake hedge fund set up. However, these brokers may not provide the services all clients require. They can be appointed alongside other PB's if they offer partial services.
3. Importantly, self-managed EU funds do not need a management company and are operated by e.g. a 3 person Investment Committee that sits as part of the fund i.e. internally managed. The advantage is you do not need to incur the time and costs of a management company and can take time deciding if you need one and when and where to set up. If you trade frequently you may need regulatory cover in the country you are in if it is different to where your fund is. If you use a regulatory umbrella for a self-managed fund the umbrella is not on your fund documentation, meaning you can build your brand without third party interference, risk or potential taint.
4. Note. Some management companies e.g. in the Caribbean may not be recognised by EU countries and may be vulnerable to tax issues.
Oh yes you can! HFH is gearing up to launch the world's first online fund incorporation portal - three easy low cost steps. Legally solid. Loads of information. Very easy to complete. We take the time, cost and stress out of fund launches.
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