How to Start a Hedge Fund
Welcome to Turn Key Hedge Funds, Inc. The following will provide you with information about our company; an explanation of our services; and, an overview of some of the regulatory and legal issues that confront the administration of you hedge fund.
Turn Key Hedge Funds, Inc. has developed a "turn key" solution that combines our various expertise to streamline your hedge fund start up and administration.
Turn Key Hedge Funds, Inc. offers improved company focus through our strategic service offerings and is committed to providing our clients with quality customer service and expertise in legal, accounting, technological and administration support. Let us unlock the door to your future financial success. Turn Key Hedge Funds, Inc. administration allows the hedge fund manager to focus on what is important, investing and trading securities.
The mission of Turn Key Hedge Funds, Inc. is to provide an easy, efficient, economical and turnkey process for starting and operating your own hedge fund. Turn Key Hedge Funds, Inc.. will provide your hedge fund an experienced, knowledgeable and efficient turnkey back office at a reasonable and economical price. At Turn Key Hedge Funds, Inc., "Turnkey" means service ready for immediate use!
In its comprehensive tax planning guide, Coopers and Lybrand states that:
"As the 21st century approaches, asset management has begun to permeate the lives of virtually everyone. In unprecedented numbers, individuals who never really focused on ‘investing’ before are now investing in mutual funds, making asset allocations in their (401k) plans and following their returns in the newspapers. In addition to these mass investing tools, the number of hedge funds ("securities partnerships") has increased dramatically...
Most of the media attention surrounding asset management focuses on 2 areas:
1) Mutual funds (because large numbers of people are involved and they have large purchasing power, leading the press to postulate that they move markets; and,
2) so-called "Big Events" (either substantial price of movements or spectacular compensation).
These items are newsworthy because they are sensational. The Big Events generally occur within the hedge fund area rather than in the mutual fund area. In order to understand why this is so, a brief comparison is necessary. Mutual Funds are geared towards large-scale relatively small dollar investing and operate within a strict regulatory framework. They provide diversification and other protections for the "unsophisticated investor." While these safeguards help limit the exposure of an investor’s money to substantial loss from a singular incident, they also limit the ability to profit substantially from a Big Event on a single position. Furthermore, with mutual funds, there are limits on manager compensation. The factors have lead to the growth of hedge funds, which have become the investment vehicle of choice for a wide range of healthy investors and money managers seeking substantial returns."1
Currently, traders and small investors are becoming more interested in pooling assets to engage in electronic trading. The development of technology and sophisticated "front ends" made available to the public by the traditional broker as well as the easy availability of electronic trading tools has expanded investing and trading opportunities to knowledgeable and sophisticated investors who are not necessarily part of the securities industry. The Hedge Fund Industry is in its beginning stages as a large number of wealthy and sophisticated investors look for alternative investment vehicles. Even with the failure of the hedge fund, Long Term Capital Markets, there is no paucity of wealthy investors desiring to place their money with hedge funds. Factors contributing to the growth of the Hedge Fund Industry are continued strong economic markets, increased electronic access to markets and, continued interest in non-traditional funds and investments promising higher rewards along with increased risk.
PMG, Peat Marwick, L.L.P. estimates that hedge fund assets grew from under $20,000,000 in 1990 to over $170 billion in 1996. It also estimates that the number of funds grew from under 500 to over 2,500 in little more than 5 years. It attributes the growth of the hedge fund industry to acceptance of alternative investments and the increase in the base of the sophisticated investor, especially the high net worth private investor. In their report, The Coming of the Evolution of the Hedge Fund Industry, Dr. Rama Rao and Mr. Jerry Szilagyi opined that the "... affluent private investors represent more than 80% of the hedge fund assets; the balance of almost 20% is made up of institutional investors including pension funds, endowments, foundations, and insurance companies... Affluent households, those with investable assets of $1,000,000 control about $5 trillion of financial assets. This affluent segment of the population is growing at 14% annually while the population as a whole is growing at 1%. Strong asset growth is also projected for institution investors. The financial assets available for investment are expected to grow from $10 trillion in 1996 to over $16 trillion by 2001.
Based on the analysis of the underlying forces, the outlook for the future growth of the hedge fund industry is very promising. We project an annual growth rate of about 26% to over $500 billion of assets by 2001 and a twofold increase to over $1.7 trillion in 10 years."
Turn Key Hedge Funds, Inc. will provide to the new hedge fund manager a turn key solution for start-up of a hedge fund as well as administration services. Turn Key Hedge Funds, Inc. provides the personnel and infrastructure that allow the investor or trader to utilize his talents in the area of trading and investing as opposed to matters of office management, compliance, investor relations, and other administrative and consulting services. Turn Key Hedge Funds, Inc. will provide and manage the distribution of offering memorandums and subscription documents, investment and withdrawal of funds, investor relations, relations between the broker dealer and the money manager, as well as provide the money manager with accounting, bookkeeping and independent auditing services.
With regard to pricing and profitability, currently the fees required to launch a domestic hedge fund using the traditional legal and accounting services can easily exceed $50,000. At that level of cost, the trader or investor seeking to launch his hedge fund would require commitments to substantial investment capital. At this initial stage, all such ‘commitments’ would be, by necessity, expensive with the substantial legal and accounting startup fees; oral and subject to withdrawal at the whim of the potential investor; and without the benefit of a private offering memorandum. That kind of launch risk is mitigated by the Turn Key start up.
Turn Key Hedge Funds, Inc. will launch the money manager’s hedge fund at a fraction of the traditional costs. Moreover, Turn Key Hedge Funds, Inc. provides continuing administration support tailored to your hedge funds particular needs. Investors will contact the hedge fund by calling the hedge fund’s administrative office which is located at the offices of Turn Key Hedge Funds, Inc.. Your investors can e-mail your hedge fund at your hedge fund’s e-mail address which will then be routed to your hedge fund’s back office staff in the offices of Turn Key Hedge Funds, Inc.
Turn Key Hedge Funds, Inc. provides your hedge fund an office in Coral Springs, Florida and Chicago, Illinois where your administrators can meet with investors performing "due diligence" prior to their visit to your trading offices or with regulatory agencies, where necessary. Turn Key Hedge Funds, Inc.’s attorneys, accountants and technical staff are available to the hedge fund manager via a simple telephone call or e-mail message. Fast, courteous and knowledgeable service will be available from Turn Key Hedge Funds, Inc. on accounting matters, compliance matters, computer and technical matters, as well as matters involving relationships between the Hedge Fund Manager and its broker/dealer or the Exchange.
In September 2000 the "Turn Key" founder, Michael Lapat, left a successful options trading hedge
fund where he and his administration staff were responsible for all phases of hedge fund administration including compliance matters, investor relations, document preparation, and other back office responsibilities. Having worked in the hedge fund industry for the past five years both on the consulting and legal sides as well as the management side for a successful hedge fund; he has developed the concept that there should be an easy way for successful traders and stock brokers to set up their own hedge funds. This plan should allow the successful stock broker or trader to concentrate on what he does best, buy and sell securities, while at the same time access back office administration in such a way as to maintain personal control over the general operations while not being involved in the day to day management of operations. The "turn key" concept allows the successful trader to become a hedge fund manager at a fraction of the traditional start-up cost and further provides continuing support. While these services are available in the traditional sense by large law firms and accounting firms, they are not available to the successful trader or broker with access to the smaller amount of funds.
One of our long term goals is to continue to provide quality of start-up and continuing administration services to the small and mid sized hedge fund and to expand our infrastructure and offer more services to hedge fund managers throughout the United States as well as expand our relationships with additional European and offshore administrators.
1William Taggert, Gina M. DiBiondo, Coopers & Lybrand, Hedge Funds; A Comprehensive Tax Planning Guide, Coopers & Lybrand, 1 (1996).
2 Rao, Rama & Jerry Szilagyi, The Coming Evolution of the Hedge Fund Industry; a Case for Growth and Restructuring, RR Capital Management Corp. KPMG Peat Marwick. LLP (March, 1998).
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Please contact us via phone - (888) 263-4774 or E-mail info@turnkeyhedgefunds.com for our fee schedule. |
A representative from Turn Key Hedge Funds, Inc. is available to meet with any potential client at our offices in Florida or Chicago. Special arrangements can be made to travel to potential clients' offices.
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