Can you really setup a hedge fund for 10k?

In this article, I have tried to give some insights into how some cheap hedge fund set up promoters use bad short cuts. I also show an example of an average hedge fund set up and operating cost. Our 'Hedge Fund All-In-One' is designed to Provide all these core solutions at a much-reduced cost.

Hi all, Can you set up a hedge fund for under $10,000? This is one of the top questions we receive at Sun Hill Assets and, without wanting to be vague, the answer is both yes and no. You have probably seen some of these structures advertised online or in financial media which promise a cheap, no-hassle way to structure the fund of your dreams in a respected jurisdiction such as the British Virgin Islands.

What these adverts don’t tell you is that you can only take on 15 accredited investors, which in the case of the BVI means $2 million in assets and any one of the investors must have the experience to run the fund as the director. But other jurisdictions have developed, such as the island of Labuan in Malaysia, which allows you to take up to 50 investors at a time and issue private funds without the prohibitive requirements and base costs of environments such as the BVI. In the BVI, you must find accredited investors, all of which must have $2 million of assets, and usually a high minimum investment of around $100,000.

This is because private funds in the BVI are not properly regulated or even audited on an annual basis, - they are simply registered, private companies. This structure offers minimal protection for investors. Protection for investors requires trustees or custodians to handle the fund bank account alongside the fund administrator to ensure its accounting, and NAV calculations are properly handled.

Below is an exampled of the costs involved in setting up a private fund with most providers of a Standard Private Fund. Our 'Hedge Fund All-In-One ' reduces all below cost.

Setup Fund Setup $10,000 USD

Fund administrator Provision $24,000 USD

Custodian $15,000 USD

Fund Audit $5,000 USD

1st Year Cost $54, 000.00 USD 2nd year Cost $46,000.00 USD

The majority of these cheap, off the shelf solutions, offer solely basic incorporation. If you want to add additional services such as a trustee and administrator, they will offer to add themselves as a signature on the fund bank account, despite having no license as a trustee, and to act as your administrator at the same time. I’m not an attorney, but this does not look as professional, ethical protection for serious investors.

That is why Sun Hill Assets has developed a ‘Hedge Fund All in One’ solution to lower costs for the market while offering proper investor protection. We separate the fund administrator provision and the trustee of the funds account with a licensed trustee.

The jurisdiction of Labuan in Malaysia is the ideal environment for investors looking for real protection and quality service. As well as enjoying strong links to the growing SE Asia region, Labuan offers investors a sound regulatory environment, 3% flat income tax benefit on all net profits of the fund as a minimum investment of just $70,000.

That doesn’t mention that there are no minimum asset requirements found in most other regions. Want to find out more? Get in touch with us for more details:

support@sunhillassets.com sunhillassets.com About The Author Timothy Blanchard has over 30 years of experience in a diverse range of financial services roles, including managing his own foreign exchange hedge fund. Furthermore, his insights have been published in reputable financial journals and news media including ABC, FOX, and CBS. He began his career working for a 4 billion dollar insurance company as a licensed insurance broker, before specializing in structuring deals, working on Real-Estate investments, financial planning, and managing and training hundreds of agents.

Tim’s trading experience began with equities. Finding his feet in the stock markets, he soon began focusing on the currency derivatives markets. Note: Some statement in this article is our opinion and is not legal fact so, please do your own research. Please also note this is not offered to sell hedge funds but, for example, purposes.