Cutting The Costs Not The Corners

Sat Sep 1, 2001


Start-up funds have to tread a tightrope: spend too much and risk crippling the fund, or spend too little and risk looking amateurish


Cost is a key element of launching a hedge fund - particularly in Asia. The chances are that assets will not come flooding through the door on day one, which means that keeping costs down in the early stages is vital. If they get out of control, they can cripple the venture.

However, the catch-22 for Asian managers is that cutting too many corners will deter potential investors by making the operation look amateurish. Furthermore, many of the cost savings in the start-up phase will prove to be false economies that have to be corrected later.

The irony is that the bigger and more credible the operation looks, the easier it is to convince investors to stump up the money. But if the gamble fails and the fund does not attract investment, it will be left saddled with large start-up expenses and overheads.

There are many examples of Asian funds that...

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