17 Lessons from Rapid-Growth Hedge Fund Managers Richard C. Wilson Single Family Office Advisor

Richard C. Wilson Single Family Office Advisor✔ Bestselling Author "The Single Family Office: Creating, Managing & Investing"​

Here are 17 lessons which can be taken away from some of the fast growing hedge funds we have worked with: 1) They take transparency serious and work to be pro-actively transparent - more so than their competition. 2) They approach multiple investment channels but mostly ignore those completely out of their reach (example, potential pension fund clients for a $75m fund). 3) They are always developing relationships and they have dedicated internal and some external professionals to always be selling on their behalf. 4) They not only have pedigree on their team but they are always building that pedigree through additional research, hiring of expert staff, and through speaking and writing. 5) They document their operations and make decisions based on what is best long-term for the organization rather than what is cheaper to implement today. 6) They have risk management and trading plans which are closely followed. This helps them improve their actual trading results and provides confidence to investors since their historical trading actually matches up against the decision making rules of their plans. 7) They know that while "risk management" sounds less sexy than "hedge funds," it is the business they are in, and they invest in their own business accordingly. 8) They have documented, tested, and third party-verified financial controls, compliance processes and audits completed at least quarterly and these reports are sent to at least board members if not investors. 9) They invest and improve their infrastructure every year even if the pay-off for doing so could be 5-7 years away, ironically these are sometimes the investments which pay off the soonest though because investors recognize the type of long-term investments being made. 10) They are experts at completing due diligence processes with institutional consultants, family offices and other types of institutional investors. They have professionals who are trained for phone-based pitches and sales which makes hand-offs during these processes seamless. 11) They have just as good of marketing materials as the $1b hedge funds because after investing $300,000+ in infrastructure, talent, research, and risk management it would be a waste not to spend $20,000 on presenting it in the right light in a professional manner. 12) They have seen the light that investing in the right areas does produce returns so they re-invest their money faster and often more efficiently than even small hedge funds on a tight budget. 13) They invest in training and designation programs for their employees and board members—who they grow more long-term relationships with than many emerging hedge fund managers might. 14) They are not only aware of the competition but they are watching them. Not in terms of what they are investing in so much as what risk management tools, software, trading tools, and USPs they are employing. 15) While hiring they look for very specific skill sets and a minimum of 7 years of experience in the industry—unless they have a policy of grooming from the ground up. Most fast growing hedge funds we know like to hire professionals who can hit the ground running and quickly integrate as part of the team. They actually have a human resources department or at least one person who is head of talent development and HR related activities, a practice which almost all small hedge funds overlook. 16) They understand the "trust but verify" mindset of investors and they make it easy to verify everything. 17 ) They conduct more due diligence on business partners, investors, and potential employees than some retail investors spend on investing in small emerging manager hedge funds. I hope these takeaways are helpful to you. Richard Richard C. Wilson CEO & Founder Hedge Fund Group http://HedgeFundGroup.org