specialist hedge fund marketing. Author over 30 publications in Russian, industry related (Forbes Russia, SPEAR’s Magazine Russian Edition, Risk Management Magazine, Debt Expert Magazine, Securities Market Magazine и др.). Founder of the professional community Moscow Hedge Fund Managers Club (MHFMC). Developed the Russian Hedge Fund Index and the Russian Hedge Fund Ranking for SPEAR's magazine. Together with partners, she organized the first annual Russian Hedge Fund Industry Awards for Russian managers (RHFIA).
More 10 years worked in the field of additional education for adults, including. Development Director at the largest training center in Russia. Certified Academic Business Management Specialist (CPP, LERN, USA). Developer of educational programs for Europe Finance and the Department of Wealth Management and Philanthropy of the Moscow Business School SKOLKOVO.
I decided to collect interesting articles and materials on hedge funds from Evgenia Sluchak, if you have anything to add, write in the comments. Any materials are helpful.
Evgenia Sluchak: I am a specialist in structuring and launching private equity businesses and hedge funds, in particular, ready to answer your questions.
Question: How a hedge fund differs from a trust? In both cases, the stake is placed on the manager.
Evgenia Sluchak: Let's so: if you approach literally the understanding of the phrase trust management, then hedge fund (and any other investment fund) - this is also a form of "trust management", ie. the investor in one way or another transfers money to the manager in order to earn. Respectively, the hedge fund format has a number of advantages as a manager, and for the investor.
If it's quite primitive, then:
For a manager - his own legal business of an institutional level, the ability to aggregate investor funds into a single pool, the ability to listen to the track record, the ability to attract money from a wide range of investors, including institutional, convenient and reliable form of receiving Fees, the opportunity to receive unique conditions and tools from prime brokers, etc..
For investors - the opportunity to invest in capital-intensive strategies, transparent contractual basis, distributed and independent from the Manager transaction and reporting system, "Audited" track-record of the manager, etc..
Cons for the manager: publicly have to be responsible for the result, you have to become a businessman from a trader, you need initial investment and you need to earn at least for infrastructure in any case.
Cons for an investor: liquidity (depending on the type of strategy, otherwise there may not be such a problem) and "payment" for the fund infrastructure (but also a more restful sleep) due to increased Fee
Question: That is, a competently drafted trust management agreement and access to all instruments are enough, to be a full-fledged hedge fund? You don't have to be a bank, to take and give a loan. Maintaining a fund is expensive. Trust management - costs are minimal. The investor does not invest in the uniqueness of instruments, etc., and as a result. So why, in principle, is the manager just inferior to the fund??
Evgenia Sluchak: You're looking at it from the point of view of the management result? Then you need to understand that a hedge fund is a tool for diversification and preservation of large assets.. They want from you 15-20% per annum, will calmly survive the real +5%-10%.
Large assets will not trust a private owner, only companies with history. A hedge fund is a company, entity, The trustee is usually a private person. That, what is given to companies and those prices, which are given to companies, private traders never dreamed of. Ie. as a fund, you will at least be able to implement strategies, which, due to spreads, cannot be sold by private traders (especially for the market OTC).
As a private trader, you cannot audit your track record, the fund is enough 2-3 years just to be a plus, to start watching institutional investors around the world (primarily funds of funds).
Trust management is a great option, its by the way, you can also "civilize" without building a large infrastructure hedge fund. The question is just, that everyone solves his problem. For many investors and trust managers it is quite a "digestible" option, although the last communication with a bunch of Russian asset managers shows, that investors do not carry money into trust, no control, No one wants a black box.
A.G. (addition): Individual trust management of an individual is prohibited in Russia, since only a legal entity can have an appropriate license. The problem of individual trust management in Russia is the individual maintenance of the account of operations of each client., which makes the trust for amounts less 3 million. rub. just an unprofitable process. The presence of the fund removes this problem., but to do that, what is allowed in individual trust management, but not allowed to mutual funds (recent, for example, can't get money more, than on 1/3 time) really need a hedge fund outside of Russian jurisdiction.
Evgenia Sluchak: Yes, quite right, thanks for the comment! When I spoke about the "civilization" of private trust, I just meant work through an offshore company, without creating a fund structure. Anyway, contracts will have real legal force.
Question: According to your estimates,, how many Russian managers have created their own hedge funds?
Evgenia Sluchak: According to Bloomberg, there are about 60. Estimated - maximum 100. Very little. At various stages of growth to a full-fledged hedge fund now, I think, there is order 50 teams.
Question: Prompt, what will be the middle option between a full-fledged fund with its control costs, management, organization and trust management with its dependence on the manager (and in general dependence on a private person, including investors). That is, a middle option is needed, some kind of closed-type organizational solution, a legal entity with the ability to operate on behalf of a legal entity, administer funds, take into account expenses, distribute income. Focus of work - markets and instruments not in the Russian Federation. Investors not only in the Russian Federation. Prompt, you are welcome, optimal direction of choice. In which country, what kind of org. Structure, what are the typical costs, including expenses of investors in the form of taxes, etc.. Thanks.
Evgenia Sluchak: There are incubation companies, self-managed funds, sub-funds in the platform are various trade-offs, which need to be discussed. By jurisdiction - normal Caymans and BVOs with such input data. But, once again - a lot of subtleties (who are the investors, how many of them, specific instruments and markets, what counterparties are needed, etc.), you can develop a solution specifically for your tasks, write me more details in a personal.
Question: And in the fund, usually, works (manages) one man? There is such, that they have a team? According to what canons such a team is recruited?
Evgenia Sluchak: One Man Is A Gamble, objectively. For a hedge fund, at least a leader is needed, which does not always coincide with the concept of "talented trader». Everything is like in an ordinary business - a restaurant, store, etc.. I need a Manager by vocation and ability. The perfect team - 2-3 Person, complementary in knowledge and business qualities. Best of all "trader" + "Sales" + "Operator" + "Risk manager" in various combinations. Then it turns out "business", not playing it.
Question: And what are the licenses for hedge funds in the Russian Federation??) What is the organizational and legal form?
Evgenia Sluchak: In Russia, there are no hedge funds in the classical sense, there is a closed-end investment fund of the "hedge fund" category, which can do a little more than a regular mutual fund. If you want to open one, get ready to give about 1 million. dollars and compete with Renik, Alfa-Bank, Finam and other Russian "investment houses" with a history and huge infrastructure. I do not think, what do you need it. International structures are better suited for private business in terms of prices and opportunities..
Question: Prompt, you are welcome, where to see the rating and all information on existing funds in the world?
Evgenia Sluchak: By Hedge Funds, about a dozen normal bases. But since hedge funds are for qualified investors, then access to these databases is accordingly limited. Or you have to look in Bloomberg, which not everyone has, either pay money. Alternatively, check out Hedgeco.net - they have a free database, but it is necessary to register "correctly" as a qualified investor.
Question: Tell, you are welcome, Here's an example of a hedge fund reward 2% of the average annual size of assets + 20-25% from profit on operations. How income is distributed among managers? After all, if the main part of earnings is 2% asset value, then the creation of a hedge fund with the involvement of < 50 million $ unattractive occupation. Or am I misunderstanding something? thanks in advance
Evgenia Sluchak: 2% it is essentially not money of managers, in the overwhelming majority of cases, they completely go to pay for infrastructure (legal structure, counterparties, office, etc.). You shouldn't count on this earnings at all. And that, don't think about it, that the managers of small funds live "beautifully" - they earn only from the profit, no different from most budding businessmen. The goal is to survive 2-3 of the year, get a positive story and collect more 50 million.
Question: Evgenia: how much does it cost to register a hedge fund? ??? How long, what do you need. Thanks in advance.
Evgenia Sluchak: A very broad question, about, how much does the car cost?». There are a lot of factors here - which jurisdiction, how many investors will there be, where are they from, etc.. If very roughly, then the structure of the management company + the fund in the Caymans / BVI will cost 40-50 thousand. Dollars. It is done in a time of about six months. Naturally, there are simpler and cheaper structures, there are more complex and expensive.
In the question I did not see “what is needed?». You need to understand what tasks you want to solve, so that the solution is adequate in terms of price / quality. And correspondingly, in addition to financial costs, get ready for the need to draw up many different papers and recommendations from your counterparties (banks, Brokers etc.).
Question: Please tell me what bonus/bonus/payment systems exist in hedge funds. If there is a lot of information, then you can personal message.
Evgenia Sluchak: Almost all hedge funds are partnerships, no hired employees, at best on 5-6 one hired partner. Therefore, everything is done within the framework of a partnership agreement., some minimum wages can be received from the Management Fee, but "share" in the end the earned Success Fee.
P.S. Naturally, I'm not talking about giants like BlackRock, there are naturally more hired employees and the system is closer to investment banking, but still - partnership is at the heart of.
Question: How a hedge fund differs from a trust? In both cases, the stake is placed on the manager.
Evgenia Sluchak: Let's so: if you approach literally the understanding of the phrase trust management, then hedge fund (and any other investment fund) - this is also a form of "trust management", ie. the investor in one way or another transfers money to the manager in order to earn. Respectively, the hedge fund format has a number of advantages as a manager, and for the investor.
If it's quite primitive, then:
For a manager - his own legal business of an institutional level, the ability to aggregate investor funds into a single pool, the ability to listen to the track record, the ability to attract money from a wide range of investors, including institutional, convenient and reliable form of receiving Fees, the opportunity to receive unique conditions and tools from prime brokers, etc..
For investors - the opportunity to invest in capital-intensive strategies, transparent contractual basis, distributed and independent from the Manager transaction and reporting system, "Audited" track-record of the manager, etc..
Cons for the manager: publicly have to be responsible for the result, you have to become a businessman from a trader, you need initial investment and you need to earn at least for infrastructure in any case.
Cons for an investor: liquidity (depending on the type of strategy, otherwise there may not be such a problem) and "payment" for the fund infrastructure (but also a more restful sleep) due to increased Fee
Question: That is, a competently drafted trust management agreement and access to all instruments are enough, to be a full-fledged hedge fund? You don't have to be a bank, to take and give a loan. Maintaining a fund is expensive. Trust management - costs are minimal. The investor does not invest in the uniqueness of instruments, etc., and as a result. So why, in principle, is the manager just inferior to the fund??
Evgenia Sluchak: You're looking at it from the point of view of the management result? Then you need to understand that a hedge fund is a tool for diversification and preservation of large assets.. They want from you 15-20% per annum, will calmly survive the real +5%-10%.
Large assets will not trust a private owner, only companies with history. A hedge fund is a company, entity, The trustee is usually a private person. That, what is given to companies and those prices, which are given to companies, private traders never dreamed of. Ie. as a fund, you will at least be able to implement strategies, which, due to spreads, cannot be sold by private traders (especially for the market OTC).
As a private trader, you cannot audit your track record, the fund is enough 2-3 years just to be a plus, to start watching institutional investors around the world (primarily funds of funds).
Trust management is a great option, its by the way, you can also "civilize" without building a large infrastructure hedge fund. The question is just, that everyone solves his problem. For many investors and trust managers it is quite a "digestible" option, although the last communication with a bunch of Russian asset managers shows, that investors do not carry money into trust, no control, No one wants a black box.
A.G. (addition): Individual trust management of an individual is prohibited in Russia, since only a legal entity can have an appropriate license. The problem of individual trust management in Russia is the individual maintenance of the account of operations of each client., which makes the trust for amounts less 3 million. rub. just an unprofitable process. The presence of the fund removes this problem., but to do that, what is allowed in individual trust management, but not allowed to mutual funds (recent, for example, can't get money more, than on 1/3 time) really need a hedge fund outside of Russian jurisdiction.
Evgenia Sluchak: Yes, quite right, thanks for the comment! When I spoke about the "civilization" of private trust, I just meant work through an offshore company, without creating a fund structure. Anyway, contracts will have real legal force.
Question: According to your estimates,, how many Russian managers have created their own hedge funds?
Evgenia Sluchak: According to Bloomberg, there are about 60. Estimated - maximum 100. Very little. At various stages of growth to a full-fledged hedge fund now, I think, there is order 50 teams.
Question: Prompt, what will be the middle option between a full-fledged fund with its control costs, management, organization and trust management with its dependence on the manager (and in general dependence on a private person, including investors). That is, a middle option is needed, some kind of closed-type organizational solution, a legal entity with the ability to operate on behalf of a legal entity, administer funds, take into account expenses, distribute income. Focus of work - markets and instruments not in the Russian Federation. Investors not only in the Russian Federation. Prompt, you are welcome, optimal direction of choice. In which country, what kind of org. Structure, what are the typical costs, including expenses of investors in the form of taxes, etc.. Thanks.
Evgenia Sluchak: There are incubation companies, self-managed funds, sub-funds in the platform are various trade-offs, which need to be discussed. By jurisdiction - normal Caymans and BVOs with such input data. But, once again - a lot of subtleties (who are the investors, how many of them, specific instruments and markets, what counterparties are needed, etc.), you can develop a solution specifically for your tasks, write me more details in a personal.
Question: And in the fund, usually, works (manages) one man? There is such, that they have a team? According to what canons such a team is recruited?
Evgenia Sluchak: One Man Is A Gamble, objectively. For a hedge fund, at least a leader is needed, which does not always coincide with the concept of "talented trader». Everything is like in an ordinary business - a restaurant, store, etc.. I need a Manager by vocation and ability. The perfect team - 2-3 Person, complementary in knowledge and business qualities. Best of all "trader" + "Sales" + "Operator" + "Risk manager" in various combinations. Then it turns out "business", not playing it.
Question: And what are the licenses for hedge funds in the Russian Federation??) What is the organizational and legal form?
Evgenia Sluchak: In Russia, there are no hedge funds in the classical sense, there is a closed-end investment fund of the "hedge fund" category, which can do a little more than a regular mutual fund. If you want to open one, get ready to give about 1 million. dollars and compete with Renik, Alfa-Bank, Finam and other Russian "investment houses" with a history and huge infrastructure. I do not think, what do you need it. International structures are better suited for private business in terms of prices and opportunities..
Question: Prompt, you are welcome, where to see the rating and all information on existing funds in the world?
Evgenia Sluchak: By Hedge Funds, about a dozen normal bases. But since hedge funds are for qualified investors, then access to these databases is accordingly limited. Or you have to look in Bloomberg, which not everyone has, either pay money. Alternatively, check out Hedgeco.net - they have a free database, but it is necessary to register "correctly" as a qualified investor.
Question: Tell, you are welcome, Here's an example of a hedge fund reward 2% of the average annual size of assets + 20-25% from profit on operations. How income is distributed among managers? After all, if the main part of earnings is 2% asset value, then the creation of a hedge fund with the involvement of < 50 million $ unattractive occupation. Or am I misunderstanding something? thanks in advance
Evgenia Sluchak: 2% it is essentially not money of managers, in the overwhelming majority of cases, they completely go to pay for infrastructure (legal structure, counterparties, office, etc.). You shouldn't count on this earnings at all. And that, don't think about it, that the managers of small funds live "beautifully" - they earn only from the profit, no different from most budding businessmen. The goal is to survive 2-3 of the year, get a positive story and collect more 50 million.
Question: Evgenia: how much does it cost to register a hedge fund? ??? How long, what do you need. Thanks in advance.
Evgenia Sluchak: A very broad question, about, how much does the car cost?». There are a lot of factors here - which jurisdiction, how many investors will there be, where are they from, etc.. If very roughly, then the structure of the management company + the fund in the Caymans / BVI will cost 40-50 thousand. Dollars. It is done in a time of about six months. Naturally, there are simpler and cheaper structures, there are more complex and expensive.
In the question I did not see “what is needed?». You need to understand what tasks you want to solve, so that the solution is adequate in terms of price / quality. And correspondingly, in addition to financial costs, get ready for the need to draw up many different papers and recommendations from your counterparties (banks, Brokers etc.).
Question: Please tell me what bonus/bonus/payment systems exist in hedge funds. If there is a lot of information, then you can personal message.
Evgenia Sluchak: Almost all hedge funds are partnerships, no hired employees, at best on 5-6 one hired partner. Therefore, everything is done within the framework of a partnership agreement., some minimum wages can be received from the Management Fee, but "share" in the end the earned Success Fee.
P.S. Naturally, I'm not talking about giants like BlackRock, there are naturally more hired employees and the system is closer to investment banking, but still - partnership is at the heart of.
Simple enough and easy to understand.
- A hedge fund is, first and foremost, a team.
- It is necessary to unite in a team.
- 2-3 person is the perfect team to launch a startup.
- opening funds underestimate operational risks
- therefore, you need to calculate the costs well
- there is a shortage of smart managers on the market, sensible ideas
- a hedge fund consists of a management company and a fund
- The money goes to the fund through the hedge fund administrator, which daily calculates the value of a fund unit
- prime broker does everything for you - those instruments, who you need, gives a shoulder, connects other brokers and adds all positions, controls GO on the total position.
- Good prime broker, for example, JPMorgan, wants to fuck you on $250,000 per year of commission, but on the other hand, it will rate anything.
- Russian prime brokers are more suitable for startups, e.g. Opening or Renaissance. These gluttons will be worth $5-10 thousand per month:( But there is a BUT - our prime brokerage is DMA, and that's it.. They are not up to Western standards.
- Administrator is the biggest expense, cost about order $40 thousand per year.
- Auditor - $5 thousand per year, if PWC then $25 thousand. in year.
- You can build your foundation in three steps: incubator-platform-hedge fund.
- A full-fledged hedge fund is worth launching $50 thousand.
- Platforms are created by administrators, through the management company - segregated accounts company. Fund, which has sub-funds. The platform already has a legal. consultant + manager. company + administrator and auditor. You buy an entrance to the industry for little money.
- Pass approval from each of the units, providing services to the foundation, very hard.
- APEX platform is the cheapest option.
- There's also a Cayman JP, on their platform, investment profit made its own fund.
- The entire Russian hedge fund industry is about 50 Funds, most of which are Long only, most of them were created before the crisis. Of them 6% almost completely control the industry.
- Over the past year, there were only five full-fledged funds in Russia (took data from Bloomberg).
