Me & My Money Series (Sunday Times)

Haha.. I do not have much experience nor friends in this business. Thanks for the info, guys.
It is ironic that these fund managers are likely to give a better return and higher probability of return of capital than those alternative investment companies out there but they are not available to retail investors.

(28-04-2013, 11:34 AM)yeokiwi Wrote: S$3 million is a tad too little isn't it? Does many small boutique fund start at this figure??
I suppose many sophisticated investors will avoid big funds in the regions of $billion but I suppose S$3 million sounds too little to have any confidence in the manager? With four years of investment experience in Yeoman, I thought he should have gotten some big fishes to pump money for the initial launch.

Generally speaking, boutique fund launches fall into 2 categories:

1. $10m or less

Typically these are funded by friends and family. The bulk usually comes from the principals or their families. The managers are usually people with some experience but are not famous.

2. $100m or more

Typically these are launched by people leaving famous shops and where they can claim credit for some of their previous company's track record. They get support from prime brokers who market the new fund aggressively. There have been a few funds that launched with $1bn but this is considered unusually large.

yeokiwi Wrote:The result since Dec 12 does not seem fantastic. But well, it is just a short period and may not be indicative.

Their track record is only for 3.5 months, and we do not know how much of the money was invested. If they were only 10% invested for example then relatively speaking they have done a good job and the fund should eventually do well when most of the money is invested.

yeokiwi Wrote:It is ironic that these fund managers are likely to give a better return and higher probability of return of capital than those alternative investment companies out there but they are not available to retail investors.

All those "alternative investment" products are available to retail investors because the promoters are careful to keep the investment product offshore. MAS insists on not regulating offshore investments, so this creates a loophole for unscrupulous promoters to target retail investors e.g. Profitable Plots etc.

In contrast, boutique fund managers are generally trying to do the right thing (and have their net worth at risk) but MAS makes the licensing requirement so onerous that the boutiques have no choice but to serve only accredited investors. Basically, either you stick to accredited investors or you don't have a business at all. It's better than nothing, so we make do and try to get by.

(28-04-2013, 08:20 PM)d.o.g. Wrote: Generally speaking, boutique fund launches fall into 2 categories:

1. $10m or less

Typically these are funded by friends and family. The bulk usually comes from the principals or their families. The managers are usually people with some experience but are not famous.

Wah... so little... You have my sympathies if you're charging 1% mgmt fee... 1% of max $10m is only $100k, nothing much left after all the overheads, esp. rental. I guess you'll need to rely more on performance fee.

(28-04-2013, 09:41 PM)KopiKat Wrote:

(28-04-2013, 08:20 PM)d.o.g. Wrote: Generally speaking, boutique fund launches fall into 2 categories:

1. $10m or less

Typically these are funded by friends and family. The bulk usually comes from the principals or their families. The managers are usually people with some experience but are not famous.

Wah... so little... You have my sympathies if you're charging 1% mgmt fee... 1% of max $10m is only $100k, nothing much left after all the overheads, esp. rental. I guess you'll need to rely more on performance fee.

Rental isn't usually a huge issue. You only need space for a desk and a chair. With a laptop and an Internet connection you can already operate. The real killer is payroll - because only founders work for free.

Performance fees are the only way to make real money in this business, at least until you are running $1bn, when 1% is $10m. Setups that are structured to "tick the boxes" for institutional investors from day one may need to run $100m to break even.

(28-04-2013, 10:26 PM)d.o.g. Wrote:

(28-04-2013, 09:41 PM)KopiKat Wrote:

(28-04-2013, 08:20 PM)d.o.g. Wrote: Generally speaking, boutique fund launches fall into 2 categories:

1. $10m or less

Typically these are funded by friends and family. The bulk usually comes from the principals or their families. The managers are usually people with some experience but are not famous.

Wah... so little... You have my sympathies if you're charging 1% mgmt fee... 1% of max $10m is only $100k, nothing much left after all the overheads, esp. rental. I guess you'll need to rely more on performance fee.

Rental isn't usually a huge issue. You only need space for a desk and a chair. With a laptop and an Internet connection you can already operate. The real killer is payroll - because only founders work for free.

Performance fees are the only way to make real money in this business, at least until you are running $1bn, when 1% is $10m. Setups that are structured to "tick the boxes" for institutional investors from day one may need to run $100m to break even.

Is it possible for the fund manager to work from home?

(28-04-2013, 10:26 PM)d.o.g. Wrote: Performance fees are the only way to make real money in this business, at least until you are running $1bn, when 1% is $10m. Setups that are structured to "tick the boxes" for institutional investors from day one may need to run $100m to break even.

I hope you get there soon!
$100m if non-institutional clients ought to be not too bad either...

(28-04-2013, 10:26 PM)d.o.g. Wrote:

(28-04-2013, 09:41 PM)KopiKat Wrote:

(28-04-2013, 08:20 PM)d.o.g. Wrote: Generally speaking, boutique fund launches fall into 2 categories:

1. $10m or less

Typically these are funded by friends and family. The bulk usually comes from the principals or their families. The managers are usually people with some experience but are not famous.

Wah... so little... You have my sympathies if you're charging 1% mgmt fee... 1% of max $10m is only $100k, nothing much left after all the overheads, esp. rental. I guess you'll need to rely more on performance fee.

Rental isn't usually a huge issue. You only need space for a desk and a chair. With a laptop and an Internet connection you can already operate. The real killer is payroll - because only founders work for free.

Performance fees are the only way to make real money in this business, at least until you are running $1bn, when 1% is $10m. Setups that are structured to "tick the boxes" for institutional investors from day one may need to run $100m to break even.

Hire interns to do sai Kang lor

It is a tough business to manage other people's money as a boutique fund manager. It is very demanding and does not allow error.

It is far easier to manage your own money part time. You can take much larger bet at your own risk and demand much lower return when your bet is wrong occasionally.

Well, there are other funds which also started at (1) and then grew it to (2). And yes, usually these remain accessible only to accredited investors due to business and regulatory costs.

Have met these guys before, and also sort of understand their investment approach. Based on what they have publicly disclosed, their ideal portfolio would have at least 50 stocks (very diversified), and they screen more by quantitative measures.

(28-04-2013, 08:20 PM)d.o.g. Wrote:

(28-04-2013, 11:34 AM)yeokiwi Wrote: S$3 million is a tad too little isn't it? Does many small boutique fund start at this figure??
I suppose many sophisticated investors will avoid big funds in the regions of $billion but I suppose S$3 million sounds too little to have any confidence in the manager? With four years of investment experience in Yeoman, I thought he should have gotten some big fishes to pump money for the initial launch.

Generally speaking, boutique fund launches fall into 2 categories:

1. $10m or less

Typically these are funded by friends and family. The bulk usually comes from the principals or their families. The managers are usually people with some experience but are not famous.

2. $100m or more

Typically these are launched by people leaving famous shops and where they can claim credit for some of their previous company's track record. They get support from prime brokers who market the new fund aggressively. There have been a few funds that launched with $1bn but this is considered unusually large.

yeokiwi Wrote:The result since Dec 12 does not seem fantastic. But well, it is just a short period and may not be indicative.

Their track record is only for 3.5 months, and we do not know how much of the money was invested. If they were only 10% invested for example then relatively speaking they have done a good job and the fund should eventually do well when most of the money is invested.

yeokiwi Wrote:It is ironic that these fund managers are likely to give a better return and higher probability of return of capital than those alternative investment companies out there but they are not available to retail investors.

All those "alternative investment" products are available to retail investors because the promoters are careful to keep the investment product offshore. MAS insists on not regulating offshore investments, so this creates a loophole for unscrupulous promoters to target retail investors e.g. Profitable Plots etc.

In contrast, boutique fund managers are generally trying to do the right thing (and have their net worth at risk) but MAS makes the licensing requirement so onerous that the boutiques have no choice but to serve only accredited investors. Basically, either you stick to accredited investors or you don't have a business at all. It's better than nothing, so we make do and try to get by.

(28-04-2013, 11:05 PM)KopiKat Wrote:

(28-04-2013, 10:26 PM)d.o.g. Wrote: Performance fees are the only way to make real money in this business, at least until you are running $1bn, when 1% is $10m. Setups that are structured to "tick the boxes" for institutional investors from day one may need to run $100m to break even.

I hope you get there soon!
$100m if non-institutional clients ought to be not too bad either...

Well, we all know how good he is. It is just a matter of time.

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