With failing markets and shrinking opportunities in
investment banking, increasing numbers of proprietary traders,
bankers and asset managers are taking out a new lease on their
careers by planning to launch their own fund of hedge funds
businesses. High potential rewards, an entrepreneurial
lifestyle and an escape from an institutional environment may
all be attractive reasons for taking the plunge.
A good business plan, however, must start with a realistic
assessment of the startup costs and annual running expenses.
These will largely depend on the scale and complexity of the
structure that the aspiring managers want to create. The costs
of implementing an ambitious business strategy can sometimes be
shocking, if not actually discouraging.
When ACP Partners, founded by ex-Goldman Sachs Wealth
Management men Alok Oberoi and Joseph Sassoon, considered
launching a fund of funds with eight professional and support
staff in 2001 they calculated that it would need an...