How to Start a Hedge Fund

Video Transcript

"Have you been reading in the financial newspapers and magazines about hedge funds? Have you decided to start your own. Hi this is Roger Groh at Groh Asset Management. Today we're here to talk about how to do that. Well you're going to need an accountant and an attorney and a bank to help you to go through the paperwork necessary to start a hedge fund. Exactly what that entails will depend upon what country you start the fund in. But expect some significant fees going in. In addition there may be some capital requirements that you have to initially put up in order to get the thing going. Last but not least from the very practical point of view, before you can go out and market it a lot of investors or potential investors want to know that you the manager and owner of the fund have a big investment in it, not just the start up part but that your money is invested alongside theirs so that they can feel comfortable that you, the manager are going to work your tail off to make the best investments possible for everybody that is involved. Hedge fund market is largely unregulated and depending upon the country that you're in you may not have to file any documents with any government agency. However, the investors coming in to hedge funds are very sophisticated traditionally, therefore, the legal fees associated with setting up a hedge fund are significant. In addition there may be some insurance requirements for you the manager in case something goes wrong and you're sued so having directors and officers' insurance in a hedge fund might make sense just to protect you. Hope that helps. I'm Roger Groh at Groh Asset. Thank you very much for spending time with me."