A Guide to Starting Your Hedge Fund

Successful hedge fund investing begins with well-informed strategy

A Guide to Starting Your Hedge Fund is a practical, definitive “how-to” guide, designed to help managers design and launch their own funds, and to help investors select and diligence new funds. The first book to examine the practical aspects of setting up and operating funds with a focus on energy commodity markets, this book scrutinises the due diligence process and comprehensively reviews the opportunities and risks of all energy commodity markets as hedge fund investments. Extensive planning and strategy advice prove invaluable to prospective fund managers and investors alike, and detailed discussion of the markets’ constraints help inform procedural decisions. Readers gain insight into practical matters including legal and commercial structures, due diligence, fund raising, operations, and more, allowing them to construct a concrete investment plan before ever touching a penny.

Asset managers are looking to energy commodities to provide attractive uncorrelated – if volatile – returns. These high returns, however, are accompanied by high risk. Few investors have experience evaluating these investment opportunities, and few prospective fund managers understand the market fundamentals and their associated risks. This book provides the answers sorely lacking in hedge fund literature, giving investors and fund managers the background they need to make smarter decisions.

• Understand the markets’ structures, opportunities, and risks
• Develop a comprehensive, well-informed investment strategy
• Conduct thorough due diligence with a detailed plan
• Examine the practical aspects of fund raising, legal and tax structure, and more

Oil has long been traded by hedge funds, but electricity, the fuels that generate electricity, and the environmental products like emissions allowances and weather derivatives have become the new “hot” investment strategies. These high returns come with higher risk, but A Guide to Starting Your Hedge Fund ensures participants have essential information at their disposal.

Table of Contents

Part I Why This Book?
Chapter 1 Introduction

Part II The Basics
Chapter 2 What Is a Hedge Fund?
Chapter 3 What Are Energy Commodities?
Chapter 4 Trading and Investing in Energy Commodities

Part III Starting the Journey
Chapter 5 The Business Plan: Implications and Applications
Chapter 6 Laws, Contracts, and Lawyers
Chapter 7 Service Providers

Part IV Running the Business
Chapter 8 Fundraising
Chapter 9 Operations and Infrastructure

Part V Final Thoughts
Chapter 10 Investing in Energy Commodity Hedge Funds
Chapter 11 Quo Vadis

Appendix A Sample Business Plan Outline
Appendix B Outline of a Confidential Explanatory Memorandum: Sample Offshore Feeder Ltd
Appendix C Sample Due Diligence Questionnaire Outline