6 Important Tips for Hedge Fund Managers

Hedge Fund is defined as an investment fund that pools capital from accredited investors and invests in a variety of assets to earn an active return. It's the investment vehicle that faces less regulation and employs different investment strategies. It is structured by a money manager or registered investment advisor. To work for the hedge industry one must dig deep into gathering the knowledge about industry insight and go all-in into it. Here are some golden 5 tips that are going to help hedge fund managers.

Know your competitive advantage:

First thing first, your hedge fund must have a competitive advantage over others in the market. This advantage might be in the form of marketing, information advantage, and resource or trading advantage.

Choose your strategy:

Your hedge fund must be backed by a clear, realistic and definitive strategy that will guide the investment plan. This strategy must focus on profit maximization and you should communicate it well to your team members and initial investors.

Devise a marketing and sales plan:

It is really important to develop a sales plan before you start to run a business. The first question that arises is where one can raise assets? Your potential sources of investors might be family and friends, corporations, financial advisors, foundations and endowments. Also, your business toolkit should include a business website, letterhead, professionally designed logo and PowerPoint presentation.

Form a risk management team:

While running a hedge fund, risk management is an important piece of the puzzle. You should devise a competitive and strategic plan with an experienced professional for your business and portfolio. The exposed risks of hedge funds are different from traditional funds and risk management teams should minimize the effect.

Choose a prime brokerage:

A prime brokerage firm may act as a partner to your business. They serve your needs, define the trade process and discuss how business operations will be performed. Moreover, they offer capital introduction services and are an integral part of your hedge fund.

Integrate technology:

The last step is to decide either you are building an in-house trading system or will purchase a system for your business. If you opt for building an in-house system you must devise a security plan, hire trained programmers and should form a disaster recovery strategy if the system fails to work.