How hard is it to start a hedge fund?
Recent SEC rules, which have been struck down by one Federal court but which aren’t quite dead yet, require most hedge funds to go through a quite onerous registration process, and have key personnel meet a number of qualifications. Absent those rules, almost anyone can set up a hedge fund at a quite minimal (relatively speaking) legal and administrative cost. However, succeeding as a hedge funds requires legal access a minimally sufficient range of investment products, and sufficient assets to attract dealer coverage and counterparty approval and to support prime brokerage services. $5 million in assets, which is the threshold for being an “institutional accredited investor” under U.S. law, might suffice for a few minimally-levered styles and strategies, but much more is going to be needed for most others. Another threshold ($100 million in assets) is needed to cross over into status as a “qualified institutional buyer” — being a QIB is legally required for accessing the secondary ma
