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If you’ve moved from a trading job at a bank to a hedge fund to a multi-strategy hedge fund, and are heading into 2024 uncertain about your future, Tim, former CEO of O’Day Asset Management, is here to help. Mr. Peary will provide an alternative option.
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Mr Peary, who left the company in 2021 before Crispin’s downfall, founded AB Asset Management after 20 years at the ill-fated O’Day Asset Management. It is not a multi-strategy hedge fund. It’s not even a hedge fund, but Mr. Peary clearly wants to hire people who are tired of the hedge fund game.
“Multi-level structures often fire people for reasons other than poor performance,” he says. “For example, they will decide that their capital is better placed in another strategy. Then those people will often move on to another multi-strat, where the same thing will happen again. After three repetitions, people are ready to start something new.” ”
AB Asset Scale is the new one. It is a first-loss platform where a trader who invests $250,000 of his own capital has an amount that matches the investor’s capital and leverages that capital by more than 5 times his.
Although no salary is offered, successful traders on the AB Asset Scale platform are paid 50-60% of their profits each month. Unsuccessful traders lose their capital and are asked to close down operations or round up additional capital when losses reach 10% of the unlevered principal, but heavy conversations begin when losses reach 7%. says Peary.
20% of profits are donated to investors. 20% is allocated to the AB asset scale.
The platform signed its first trader in October, but Peary said the model is proving popular among traders whose multi-strat work hasn’t performed as well as expected. “I have been pleasantly surprised by the diversity of people interested,” he said, adding that many of them serve as sub-portfolio managers for his existing PMs. AB Asset Scale offers them the opportunity to build their own track record. “We offer an incubation process for people who want to move to a more traditional fund structure in the future,” Peary says.
AB Asset Scale is based in the UK but is “geographically independent”. A similar arrangement exists in the United States, but traders are typically expected to raise $5 million instead of $250,000. “We have reduced the entry points,” Peary added.
If you want to join, you have to sign up for a year, and even if you close after six months, you’re promised to pay the management fee for that year. There is no office. You will be working from home. If you want, you can bring in a few programmers and traders, but you’ll have to pay them yourself…
It’s an arrangement that won’t suit everyone. If you don’t have $250,000 to spare and can’t go without a paycheck until (and until) you start making profits, you can’t play. AB Asset Scale is also not appropriate if you are trading illiquid products or have a data-heavy, technology-hungry strategy. “When people start reaching drawdown levels, they need to exit positions quickly and efficiently,” Peary said. Strategies that trade deep, liquid markets such as macro, forex, stock indices, interest rates, and commodities are best suited.
As with multi-strats, not everyone will be successful. 20% are discontinued due to poor performance, 60% are mediocre, and 20% are expected to become stars. Over time, these 20% may be allocated more capital. “This is a natural evolution. They may move into a traditional fund structure under our umbrella,” Peary said.
Just don’t call it a pod.
Photo by Gemma Evans on Unsplash
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