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A Sample Hedge Fund Business Plan Template

Are you about starting a hedge fund business? If YES, here is a complete sample hedge fund business plan template & feasibility study you can use for FREE.

Okay, so we have considered all the requirements for starting a hedge fund business. We also took it further by analyzing and drafting a sample hedge fund marketing plan template backed up by actionable guerrilla marketing ideas for hedge fund companies. So let’s proceed to the business planning section.

Table of Content

  1. Executive Summary
  2. Market Analysis
  3. SWOT Analysis
  4. Financial Projection
  5. Marketing Plan
  6. Marketing ideas & Strategies

If you are a big time investor looking for ways to expand your investment portfolio, then you should consider starting a hedge fund firm. You may want to ask ‘what is a hedge fund?

What is a Hedge Fund?

Hedge fund can be simply defined as is a regulated investment fund (a much wider range of investment and trading activities) that is typically open to a limited range of investors who pay a performance fee to the fund’s investment manager who invest the funds and bring returns. The investment could either be a long term investment or a short term investment.

Hedge funds manager are known to invest in a broader range of assets, which includes long term and short term investment in equity, bonds, commodities, and derivatives et alit you run a hedge fund firm, the easiest ways for you to make money is to help your clients make more money.

The income you generate is based on your performance which is why most hedge fund managers employ different investment strategies to generate good returns for their clients. In other words, the performance fee is indeed the defining characteristic of a hedge fund.

What Does It Take to Start a Hedge Fund Business Successfully?

If you are looking towards starting your own hedge fund, then should be ready to manage a small highly professional workforce. This is so because on the average, hedge fund firms are known to manage huge assets with relatively few employees. Hence the stiffer competition in the hedge fund industry amongst those seeking for job openings in the industry.

Saying that Hedge funds investment is a risky venture is just stating the obvious because hedge funds aren’t regulated by the government or any financial regulatory body because it is limited to friends, business partners and families and not open to the general public. The risk involved in hedge funds is what makes it open to only few accredited investors.

Here below is a sample hedge fund business plan;

A Sample Hedge Fund Business Plan Template

  • Industry Overview

Hedge funds is simply an investment medium that enables big time accredited investors or well established institutions pool cash or capital together to be able to invest in securities and any other form of investment opportunity that requires large initial capital to invest in.

The fact that hedge funds requires large capital makes it easier for only the rich and accredited investors to cash in on it. Hedge funds are only open to limited partners with the required cash for investing in capital intensive business portfolios.

The concept and term ‘Hedge Fund’ was created by Alfred Jones in 1949. He founded A.W. Jones, which is a partnership with four friends, and through this investment vehicle, they were able to invest one hundred thousand U.S. dollars ($100,000) in the stock market.

They employ both long and short positions. The bottom line is that, they were able to generate 17.3 percent returns during the first year of investment and that was enough to set the ball rolling for hedge fund investment et al.

In the United States of America, the hedge fund industry is estimated to be a $1.2 trillion industry with approximately 9,000 active hedge funds and funds of funds. Statistics has it that in December 2009, the largest – top 25 hedge fund managers had an estimate of $520 billion in assets under management. Amongst the list are Bridgewater Associates, Paulson & Co., and Soros Fund Management.

History has it that hedging out unwanted risk has been a common business activity in the financial markets for centuries. Which is why as far back as the 18th centuries, commodity manufacturers and merchants have started using forward contracts to protect themselves against futures changes in commodity prices— they do it in order to hedge out the risk of adverse market fluctuations beyond their control. Forward contracts are still pretty much traded to this day in the futures / commodities market.

Hedge Funds Investment is not open for all and sundry basically because it requires large capital to invest in it. The amount required to invest in hedge funds could range from 1 Million US Dollars to even multiple Millions of Dollars. Each Hedge fund managers have their requirements, so just ensure that you save up large amount of cash that can meet the investment requirement of the average hedge funds you can find.

Hedge fund firms are known to generate income by charging both a management fee and a performance fee from their clients. On the average, hedge fund firms charges between 1 percent and 2 percent of assets under their management annually and the performance fees is about 20% of gross profits returned by the fund which is usually based on certain constraints.

There are several hedge fund firms in the United States of America but that does not in any way place a cap on the industry. If you know you have studied the industry and you have vast and unique investment strategies, then you can come into the industry and make profits.

Despite the high volatility of the market, investors still choose to invest in hedge funds because of the huge returns on their investment they stand to gain if they get it right. Hedge funds are known to provide access to a wide range of investment styles, strategies and hedge fund managers for one easy-to-administer investment.

Hedge fund provides more predictable returns (depending on the objectives of the fund of funds), than traditional investment funds and it provides effective diversification for investment portfolios.

Hedge Fund Business Plan – MARKET ANALYSIS

  • Market Trends

If you look through some of the top hedge fund firms, you will realize that most of them have their headquarters in New York City. This is so because New York is one of the world’s business headquarters; key business decisions that shape the world of business are taken in New York.

The nature of hedge fund investment requires the services of core investment professionals. As a matter of fact, before any investor can commit their hard earned money under you’re the care of a hedge fund manager; they usually would want to know the profile of the hedge fund manager.

On the average, hedge fund firms employ strategies that can help them reduce market risk specifically by shorting equities or through the use of derivatives. Which is why many hedge fund strategies, mostly arbitrage strategies, are limited as to how much capital they can successfully employ before returns starts diminishing. Little wonder most successful hedge fund managers place limit on the amount of capital they will accept per time.

  • Our Target Market

Hedge funds is simply an investment medium that enables big time accredited investors or well established institutions pool cash or capital together to be able to invest in securities and any other form of investment opportunity that requires large initial capital to invest in.

The fact that hedge funds requires large capital makes it easier for only the rich and accredited investors to cash in on it. Hedge funds are only open to limited partners with the required cash for investing in capital intensive business portfolios.

As a standard, accredited and licensed hedge fund management firm, JB Moses & Associates, LLP offers a wide range of investment portfolio management services hence we are well trained and equipped to services a wide range of clientele base.

Our target market cuts across businesses and investors that have the required capital to invest in hedge fund. We are coming into the industry with a business concept and investment strategies that will enable us produce good returns on investment for our clients.

Below is a list of the individual and organizations that we have specifically design our products and services for;

  • Accredited Investors
  • Wealthy People in the Society
  • Investment Clubs
  • Top corporate executives
  • Corporate Organizations / Blue Chip Companies

Our Competitive Advantage

Despite the fact that hedge funds give huge returns on investment, it is indeed risky venture. If you drive through the street of New York City, you will come across several hedge fund firms; that goes to show you that there are competitions in the industry. For you to survival as a hedge fund firm, you should be able to come up with workable investment strategies; strategies that will help you attract the required cash / capital and above all you should be a good risks manager.

We are quite aware that to be highly competitive in the fund managers and investment services industry means that we should be able to give good returns on investments to our clients, deliver consistent quality service, our clients should be satisfied with our investment strategies and we should be able to meet the expectations of clients.

JB Moses & Associates, LLP might be a new entrant into the hedge fund management services industry in the United States of America, but the management staffs and owners of the business are considered gurus. They are people who are core professionals and licensed and highly qualified portfolio management experts in the United States. These are part of what will count as a competitive advantage for us.

Lastly, our employees will be well taken care of, and their welfare package will be among the best within our category (start – ups hedge fund management businesses) in the industry meaning that they will be more than willing to build the business with us and help deliver our set goals and achieve all our aims and objectives.

Hedge Fund Business Plan – SALES AND MARKETING STRATEGY

We are mindful of the fact that there is stiffer competition amongst hedge fund managers and other related financial consulting service providers in the United States of America; hence we have been able to hire some of the best business developer to handle our sales and marketing.

Our sales and marketing team will be recruited base on their vast experience in the industry and they will be trained on a regular basis so as to be well equipped to meet their targets and the overall goal of the organization. We will also ensure that our return on investment and excellent job deliveries speaks for us in the market place; we want to build a standard hedge fund management business that will leverage on word of mouth advertisement from satisfied clients (both individuals and corporate organizations).

Our goal is to grow our hedge fund management firm to become one of the top 20 hedge fund management firms in the United States of America which is why we have mapped out strategy that will help us take advantage of the available market and grow to become a major force to reckon with not only in the New York City but also in other cities in the United States of America.

JB Moses & Associates, LLP is set to make use of the following marketing and sales strategies to attract clients;

  • Introduce our business by sending introductory letters alongside our brochure to corporate organizations, accredited investors, top corporate executives and key stake holders in New York City and other cities in The United States
  • Advertise our business in relevant financial and business related magazines, newspapers, TV stations, and radio station.
  • List our business on yellow pages ads (local directories)
  • Attend relevant international and local finance and business expos, seminars, and business fairs et al
  • Create different packages for different category of clients (start – ups and established corporate organizations) in order to work with their budgets and still deliver good returns on investment
  • Leverage on the internet to promote our business
  • Engage direct marketing approach
  • Encourage word of mouth marketing from loyal and satisfied clients
  • Our Pricing Strategy

Hedge fund managers make their money on commission; they charge their client some percentage of the capital invested and service charges et al.

At JB Moses & Associates, LLP we will keep our fees below the average market rate for all of our clients by keeping our overhead low and by collecting payment in advance. In addition, we will also offer special discounted rates to our loyal and repeated customers.

  • Payment Options

At JB Moses & Associates, LLP our payment policy will be all inclusive because we are quite aware that different people prefer different payment options as it suits them. Here are the payment options that we will make available to our clients;

  • Payment by via bank transfer
  • Payment via online bank transfer
  • Payment via check
  • Payment via bank draft
  • Payment with cash

In view of the above, we have chosen banking platforms that will help us achieve our plans with little or no itches.

Hedge Fund Business Plan – Publicity and Advertising Strategy

The uniqueness of hedge fund firms is such that it is the result they produce that helps boost their brand awareness. Hedge fund firms do not go out there to source any investors that they can come across but they are strategic when it comes to inviting investors to invest in their hedge funds.

It will be out of place to boost your hedge fund brand if you have not proven your worth in the industry. If you have successfully proven that you have what it takes to operate a hedge fund firm, then you next port of call is to strategically engage the media to help you promote your brand and also to create a positive corporate identity.

We have been able to work with our brand and publicity consultants to help us map out publicity and advertising strategies that will help us walk our way into the heart of our target market. We are set to take the hedge fund management services industry by storm which is why we have made provisions for effective publicity and advertisement of our travels and tours agencies.

Below are the platforms we intend to leverage on to promote and advertise JB Moses & Associates, LLP;

  • Place adverts on both print (community based newspapers and magazines) and electronic media platforms
  • Sponsor relevant community based events / programs
  • Leverage on the internet and social media platforms like; Instagram, Facebook , twitter, YouTube, Google + et al to promote our brand
  • Install our Bill Boards on strategic locations all around New York City.
  • Engage in road show from time to time
  • Distribute our fliers and handbills in target areas
  • Ensure that all our workers wear our branded shirts and all our vehicles are well branded with our company’s logo et al.

Generating Funding / Startup Capital for JB Moses & Associates, LLP

JB Moses & Associates, LLP is a business that will be owned and managed by Johnbull Moses and his business associates. They are the sole financial of the firm, but may likely welcome other partners later which is why they decided to restrict the sourcing of the start – up capital for the business to just three major sources.

These are the areas we intend generating our start – up capital;

  • Generate part of the start – up capital from personal savings
  • Source for soft loans from family members and friends
  • Apply for loan from my Bank

N.B: We have been able to generate about $50,000 (Personal savings $40,000 and soft loan from family members $10,000) and we are at the final stages of obtaining a loan facility of $100,000 from our bank. All the papers and document has been duly signed and submitted, the loan has been approved and any moment from now our account will be credited.

HEDGE FUND BUSINESS GROWTH: Sustainability and Expansion Strategy

The future of a business lies in the numbers of loyal customers that they have the capacity and competence of the employees, their investment strategy and the business structure. If all of these factors are missing from a business (company), then it won’t be too long before the business close shop.

One of our major goals of starting JB Moses & Associates, LLP is to build a business that will survive off its own cash flow without the need for injecting finance from external sources once the business is officially running. We know that one of the ways of gaining approval and winning customers over is to give investors good returns on their investment.

We will make sure that the right foundation, structures and processes are put in place to ensure that our staff welfare is well taken of. Our company’s corporate culture is designed to drive our business to greater heights and training and re – training of our workforce is at the top burner of our business strategy.

As a matter of fact, profit-sharing arrangement will be made available to all our management staff and it will be based on their performance for a period of three years or more as determined by the board of the organization. We know that if that is put in place, we will be able to successfully hire and retain the best hands we can get in the industry; they will be more committed to help us build the business of our dreams.

Check List / Milestone

  • Business Name Availability Check: Completed
  • Business Incorporation: Completed
  • Opening of Corporate Bank Accounts various banks in the United States: Completed
  • Opening Online Payment Platforms: Completed
  • Application and Obtaining Tax Payer’s ID: In Progress
  • Application for business license and permit: Completed
  • Purchase of All form of Insurance for the Business: Completed
  • Conducting Feasibility Studies: Completed
  • Generating part of the start – up capital from the founder: Completed
  • Applications for Loan from our Bankers: In Progress
  • Writing of Business Plan: Completed
  • Drafting of Employee’s Handbook: Completed
  • Drafting of Contract Documents: In Progress
  • Design of The Company’s Logo: Completed
  • Graphic Designs and Printing of Packaging Marketing / Promotional Materials: Completed
  • Recruitment of employees: In Progress
  • Purchase of the Needed software applications, furniture, office equipment, electronic appliances and facility facelift: In progress
  • Creating Official Website for the Company: In progress
  • Creating Awareness for the business (Business PR): In progress
  • Health and Safety and Fire Safety Arrangement: In progress
  • Establishing business relationship with vendors and key players in the industry: In progress
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