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How’s it going, fellow managers? Today, I’ll tell you what fund managers don’t compete for investors!
Check out my YouTube short to see a 1-minute summary and admire my artistic ability!
Any kind of business competes for consumers, clients, or customers.
If someone isn’t buying your product, they are buying someone else’s!
So why do fund managers face less competition from investors?
Time Horizons
Let’s take a look at Ray Dalio.
He launched funds in 2004 and 2005.
Because of SEC regulations, the number of investors he could include in a single fund was capped at 1,999.
So, Dalio set the minimum capital commitment for his hedge fund at $100M!
What does this have to do with “time horizons?”
This means that I, for example, could set up a similar fund with a similar structure, but with less capital commitment.
I would not compete at all for Dalio’s investors!
Additionally, as time goes on, I make more money and can soon raise my fund’s minimum capital buy-in.
As I said in my short clip,
“As your fund grows in size, the level of investor moves to a higher net worth”
This will make space for the next upcoming fund manager!
Objectives
The objectives of the different fund managers and different investors vary drastically.
Some funds focus on assets like real estate and others are made around cryptocurrency.
It’s simple, everyone is different and has different interests and confidence that certain assets will do better than others.
Investors, on the other hand, have different goals and risk tolerance, which may not align with the objectives of a certain fund.
Risk Appetite
Funds and investors often have different risk appetites…
Some funds adopt a more diversified and risk-averse approach to investing, while individual investors may be more willing to take on greater risk in pursuit of higher returns.
This difference in risk tolerance means that funds and investors are pursuing different opportunities and therefore not directly competing with one another.
Conclusion
So, those are the main reasons why fund managers don’t compete with investors!
If you want help finding investors or starting a fund, visit Fund Launch!
That’s it for today!
Thanks,
Want to get direct guidance for your fund? Schedule a time with my Fund Advisors!
DISCLAIMER: This content is for educational and informational purposes only. It is not to be taken as tax, financial, or legal advice. You should always consult a legal professional before taking action. Furthermore, this is not a recommendation to buy or sell any security. The content is solely just the opinion of the authors.
