A recently published survey from the Alternative Investment Management Association (AIMA) and broker GPP has reported that, despite what might be considered relatively low levels of assets for a hedge fund, there is still scope for small funds to break even or indeed make a profit, with less than $100 million in assets under management.
Take Devet Capital: it was formed in 2014 when its founders, Irene Perdomo and Leonardo Marroni, created a product which they felt was of significant value and that they believed they could bring to the market themselves. Therefore, they created their fund, identifying from the outset that its ultimate success would be determined as much by the streamlined nature of their business model as by the strength of the product. The innovative nature of their product, combined with their enthusiasm and determination to create a modern and unique hedge fund, drew early interest.
Having met while working together at Barclays, and having co-authored a finance textbook published by Wiley (Pricing and Hedging Financial Derivatives: A Guide for Practitioners), Perdomo and Marroni launched the strategy with their own funds. And they remain invested.
Their objective was to allow the fund to blossom by minimising overheads. They recognised how much of a pitfall there was to over-spending at an early stage in their development and focused on achieving the correct balance between a robust and credible infrastructure, capable of gaining the confidence of investors, and an operating model that would be efficient and effective.