Starting a Hedge Fund
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Starting a Low Cost Hedge Fund
• Title IV of the Dodd-Frank Act.
• JOBS Act, Title II (NOTE: It is now anticipated that the rules may come into effect some time in 2013. Until such time, general solicitation and advertising is still prohibited.
Our professional services begin with pre-launch consultation, document preparations check list, and basic information regarding federal and state rules & regulations affecting your particular fund development and operation.
Starting a low cost hedge fund in the U.S. is typically structured as a limited liability company incorporated in Delaware. Depending on which type of fund you choose will determine which set of regulations will apply when starting a hedge fund. Here are some examples of possible regulatory exemptions to which can be relied on when starting a hedge fund in the U.S.:
• Investment Company Act of 1940 Section 3(c)(1) or 3(c)(7).
• Regulation D, Rule 506 of the Securities Act of 1933.
Setup costs. If you set up a U.S. based hedge fund, your costs should range $6,000 to $10,000. This includes preparing your offering documents, registering the LLC (I recommend Delaware) and having a qualified securities attorney review your offering documents. Any further out-of-pocket expenses are for marketing and travel to meet and greet your potential investors.
Calculate ongoing costs. This is where many start up funds fall short. Setting up is easy, maintaining is another story. You will need to consider hiring an administrator who will handle your accounting records, calculate your fees, and run due diligence on your potential investors. All this comes with a monthly cost which is charged to your fund. Administrator costs can range from $500 to $4,000 per month. You will also need an auditor. Technically, it is not a requirement but most, if not all investors demand it. Depending on the "name" of your auditor, yearly costs can be from $5,000 in upwards to $20,000 (Big 4). Again, charged to the fund.
Open your bank and brokerage accounts. It is not always necessary to have a prime broker in the early stages of a fund. They become way too expensive. Start with a basic cash account for subscriptions, expenses, distributions, etc. Then open a brokerage account.
Decide on a launch date. I have seen funds launch after a certain amount of seed capital is raised. I have also seen funds which launch as soon as the first subscription is approved. This all depends on your minimum investment amount and your trading strategy. It's best to consult with your hedge fund adviser on this one.
With a global network of third party service providers, we can introduce to you administrators, auditors, prime brokers, bankers and legal counsel who can work side-by-side with you assuring that you and your fund comply with state and federal tax rules and securities regulations. As a value added service, Frank Nagy Financial Services will also provide global venues of investment trade shows and how to utilize them in your effort to network among accredited and institutional investors.
Frank Nagy Financial Services will tailor your fund development accordingly:
• Hedge Fund Consultation
• Prepare Hedge Fund Private Placement Memorandum
• Prepare Hedge Fund Subscription Agreement (Qualified investors)
• Prepare Hedge Fund Purchaser Questionnaire
• Prepare Hedge Fund Purchaser Representative Questionnaire
• Value Added Monthly Index spread sheet (VAMI)
• Financial Spreadsheet
• Complete SEC form D
• Fund Administrator Introductions
• Fund Attorney Introductions
• Fund Auditors Introductions
• Introduction to International Investment Trade Shows
• FREE list of over 4,000 Institutional investors
Total cost for services above.......................US $5,900
Contact us now for a
free initital telephone consultation: