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  • Writer's pictureMatt DeLong

What are the benefits to open a hedge fund while investors can directly put money into my investing?

Sounds pretty simple, right? There are compliance guidelines to follow.

Typically, one would setup an LLC (or similar) as the investment manager entity and an LP for the investment “fund”. The LLC would invest on behalf of the Limited Partners / investors (LP’s) in the fund and the LLC would earn management fees on behalf of the LP’s. You would have to hire a “team” of team of analysts, traders, compliance, investor relations — not just a 1-man shop. If it’s a quant fund, you would also add several quants, data cleaners, testers, etc.

Also, all of the hedge funds I know of personally use a 3rd party “Fund Administrator” to manage the LP account reconciliation, performance reporting, accounting, etc. This assures investors their is some oversight on what you are doing instead of a used-car-salesman sorta feel that your question has.

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