The Hedge Fund Launch advantage
Advantages for Managers
Establishing a hedge fund is a capital-intensive venture with respect to operations. Furthermore, many strategies cannot be optimally implemented (e.g., establishment of prime brokerage accounts, portfolio diversification, trading cost economies of scale, etc.) without a significant amount of trading capital.
A meaningful seed capital arrangement offers greater stability of capital, as opposed to the “hot money” often associated with a large group of small investors or a single large non-strategic investor. So how does Hedge Fund Launch help?
Hedge Fund Launch offers significant value to new and emerging hedge fund managers by making available its hard won knowledge capital and personal and professional networks to guide the manager toward an optimal strategy for obtaining critical seed capital. For a fee, Hedge Fund Launch is also prepared to act as a sounding board with respect to all aspects of the fund’s operation.
Advantages for Investors
In support of the myriad benefits associated with hedge fund investing (e.g., absolute returns, low correlation to other capital markets, top talent, etc.), seed capital investors may peruse the Hedge Fund Launch database of hedge funds in order to get first looks at these funds — and without the sales pressure associated with the presence of marketers. Additionally, investors can rest assured that the hedge funds listed in the Hedge Fund Launch database are objectively presented since HFL does not engage in marketing or brokerage relationships with any hedge fund managers.
Capacity (i.e., a manager’s ability and/or willingness to accept additional capital contributions from investors) is a serious issue in hedge fund investing. As such, the lack of capacity within established, attractive funds, often results in a supply/demand imbalance between managers and investors (to the detriment of investors). Conversely, investors who are willing to go the extra mile due-diligence wise may find a “diamond in the rough” via a less established manager and may be afforded the rights to future capacity within that fund.
Research has proven that a hedge fund manager’s best performance is achieved during the early years of operation (Liang 1999). Furthermore, performance tends to taper off and/or decline when a fund’s assets increase (Kazemi et al 2001).