My Age of Investment

"A hedge fund of funds worth tens of billions of dollars?" Xia Jingxing asked.

Abel nodded, "Yes, because our last fund of funds has reached a scale of 3 billion U.S. dollars. Considering the performance bonus factor, there is still a good chance that the new fund will succeed in raising tens of billions of U.S. dollars."

Xia Jingxing chuckled, "Okay, let's not consider the difficulty of fundraising for now, have you ever thought about raising tens of billions of dollars and who to invest in?"

The mature and prudent Jiang Ping nodded slightly at the side, and echoed: "Yes, as soon as this subprime hunting operation is over, the 8 vest funds will be liquidated immediately. By then, there will not be so many sub-funds for us to choose from. Seriously!" If you care about it, the significance of setting up a fund of funds is to isolate information and risks.”

Xia Jingxing nodded slightly. What Jiang Ping said was quite right. Fund of Funds is actually a kind of fund that invests in funds. Its operation mode is just like how a fund chooses investment targets. Excellent fund managers are selected, that is, GPs of sub-funds, and GPs are asked to work for the Fund of Funds. make money.

In fact, CIC can be regarded as a fund of funds, and Vision Capital is the GP of their selected sub-fund.

LP hands over the money to the FOF for management, the FOF reinvests in sub-funds, and the sub-funds reinvest in specific targets.

Compared with direct investment in sub-funds, LP investment in FOFs has one more link, which means an extra layer of fees.

Of course, the fees charged by the parent fund are lower than those of the sub-funds. The annual management fee is generally 1%-2%. Some organizations even offer an ultra-low management fee rate of five thousandths in order to attract business. 10%-20%, but there are also 5% of this situation.

How high the fee rate can be charged depends entirely on the ability of the fund of funds, more precisely, its past performance.

At the same time, since the sub-fund also has a 2+20 fee standard, the two phases are superimposed, and the income that ultimately falls into the hands of the LP of the investment fund of funds is not much left.

Generally speaking, powerful and experienced institutions and wealthy groups will choose to invest directly in sub-funds.

If you have more strength, set up a family office directly, manage the money for yourself, and invest directly in a startup company or the secondary market without going through any fund.

Those who really invest in funds of funds are those rich people who lack investment experience and do not have much money in their hands.

Like Sequoia and Gao Ling Capital, even if rich people with average strength and no special resources come to their door with 10 million yuan, they may be ignored by others, and they even advise you to invest in funds of funds to invest in them indirectly.

On the one hand, the store is bullying customers, and on the other hand, the scale of funds is too small, which makes it very troublesome to connect.

And the fund of funds brings together 10 million of countless LPs, turning it into billions or tens of billions. They will have bargaining power when they negotiate with Sequoia and Gao Ling. It is also more convenient and trouble-free for institutions to negotiate one-on-one. .

Funds of funds in China are generally established by third-party wealth companies and trust companies to earn some intermediary fees, and the investment level is unsatisfactory. They specialize in exploiting the middle class and the small rich.

Regardless of the fact that venture capital institutions often advertise that an IPO will generate dozens or hundreds of times the return, but if you look carefully, it is full of powerful LPs, such as foreign university funds, pension funds, and some large domestic entrepreneurs.

Small rich people can't get their hands on such top-level project resources at all. Even if they are really lucky, they will still be skinned by the FOF.

The only possibility to make a lot of money is to invest in emerging venture capital institutions. These institutions have been established for a short time and have not proven themselves, so they cannot raise funds and are not picky.

However, investing in these new institutions is more likely to lose money.

Vision Capital has actually set up fewer funds of funds, and the purpose of setting up is either to confuse the outside world, or to double charges.

This is the case with Daxue No. 1 hedge fund of funds, which invests in subprime mortgages with a scale of US$3 billion.

The several funds of funds established before are all invested by themselves. Since there are no extra LPs, they are not afraid of tricks.

Daxue No. 1 is different. It has accepted multiple LP investments, including Gates’ family office waterfall investment.

The operation must be standardized, otherwise it is easy to be sued by LP.

Right now, Xia Jingxing does not intend to vigorously develop in the field of funds of funds, because if he wants to operate in a normalized manner, he must find an excellent fund manager to invest in.

Then the problem comes, there are very few GPs in the market that are better than Vision Capital.

This has entered a dead end. If you want to develop a fund of funds, you have to find excellent peers to establish cooperation, and the rate of return of peers is far lower than that of the hedge funds under Vision Capital.

Even if you bite the bullet and invest in these peers, the rate of return of the fund of funds may not be very good, which will lead to no confidence in raising management fees and revenue sharing.

In addition to increasing the total size of asset management to bluff people, it does not actually create much value.

If it weren't for the need to keep a low profile due to the subprime mortgage crisis, Xia Jingxing didn't want to bother too much with the fund of funds. For Vision Capital, which is at the current stage of development, it is a bit tasteless.

After listening to Xia Jingxing's explanation, Abel was very surprised, and still did not give up trying to persuade him: "Boss, that's ten billion dollars! Even if the management fee is lower, 1% is still 100 million dollars. Revenue sharing, this number can reach hundreds of millions of dollars, and it is every year."

Xia Jingxing shook his head and laughed: "I know this is the wealth code of a large asset management institution, and they rely on the scale of asset management to earn their annual management fees.

Isn't Blackstone's prospectus written clearly, the annual management fee income is higher than the revenue share. "

Liu Hai smiled and interjected: "So they went public, because the growth of enterprise value has reached a bottleneck, the old method is not so easy to use, and new leeks can be harvested through the open market."

Xia Jingxing nodded with a smile, and then said to Abel: "A hedge fund of funds worth tens of billions of dollars is too large, how many GPs do we need to manage the money? Twenty? Fifty?

This is a huge amount of work. Seriously speaking, we seem to have no real experience in hedge fund management and operation.

It manages 10 billion U.S. dollars at the beginning, and the spread is too big.

What if you choose some unreliable sub-funds to cooperate and suffer heavy losses? Then our signboard will be smashed, and the upward momentum will be interrupted.

The news reports will not say how much the Vision Capital Fund of Funds lost, or say the original, but people will only remember that the Vision Capital stumbled, and the level seems to be not good enough, which in turn affected other funds. "

Speaking of this, Xia Jingxing sighed, "In the short term, you can make money, but in the long run, the gains outweigh the losses.

My usual suggestion is not to touch unfamiliar fields, even if you want to touch it, you have to be cautious.

Ten billion U.S. dollars is really too much, and we can't manage it well at the moment.

And now that the subprime mortgage crisis has broken out, Wall Street is wailing, and countless hedge funds have called back and liquidated, it is not a good time to make a move. "

After hearing Xia Jingxing's explanation so much, Abel also knew that he was being flattered this time.

I thought the boss would like the giant fund, the rapidly expanding asset management scale, and the continuous inflow of management fees...

But the result was not what he had imagined. The boss was terribly calm, and he was not at all dazzled by the current results.

Of course, Xia Jingxing is very clear-headed. On a deeper level, hedging funds of funds is not impossible, but it must be done step by step, and most institutions only start to consider "making up for the quality of funds through the number of funds" after the growth of the main business line is weak.

Vision Capital's main fund is far from sluggish growth.

Looking at the development history of Vision Capital in the past few years, their private equity funds of funds have invested in one external GP of Gao Ling, and their hedge funds of funds have invested in one of Cleary Capital.

That doesn't count for Paulson. The investment time was after Daxue No. 1 Fund was established, which means that Xia Jingxing paid for the investment himself.

As long as you think about it carefully, you will know that Vision Capital is still unable to play in this field, so how could Xia Jingxing make such a big mistake.

If you want to play in this field, what skills do you need? It is necessary to have the vision to select dozens of the best hedge funds from the thousands or tens of thousands of hedge funds in the market.

Xia Jingxing felt that this was much more difficult than investing in subprime mortgages, or long-term investing in Amazon, Google, and Netflix, and the uncertainty was too great.

The operation is as fierce as a tiger, and the record is negative, and the reputation of the performance that has been accumulated with great difficulty is completely ruined.

Therefore, he is clear-headed, and it is impossible for him to just listen to a few words from Abel and decide to do it quickly.

Abel seemed to want to make up for the impression points he lost just now, and suddenly realized: "Boss, I thought about it again and think what you said is too right. The $10 billion hedge fund of funds is indeed a bit blind, so let's reduce it to 500 million Dollars, how about exercising the team?"

Hearing this, both Liu Hai and Jiang Ping gave Abel a glance. This position has changed too quickly, right?

But then again, they are so familiar, they know that Abel is this kind of person.

Xia Jingxing pondered for a while. It wasn't that he didn't look down on the FOF at all, after all, mosquito legs were also meat, but he was worried that he wouldn't be able to grasp it right now.

If step by step, a team of funds of funds capable of playing is cultivated, and all members are sharp-eyed, then he will not be worried about managing a large amount of funds.

The plan proposed by Abel is actually an attempt, a brave first step.

Without thinking for too long, Xia Jingxing said, "Okay then, let's raise a 500 million US dollar hedge fund of funds. This time, we have to be serious and operate like a real fund of funds. We are not allowed to invest in our funds." funds, and cannot invest in Paulson Fund and Cleary Capital.

It is necessary to get out of the comfort zone and go outside to find excellent fund managers. "

Abel nodded and took it to heart, knowing that the boss really cared about the development of the FOF this time.

Xia Jingxing glanced at the three of them, and said again: "This year, the Lixia No. 1 Fund was liquidated, but two new funds were also raised, and two more are in the process of being raised, and one was torn down and redesigned. The total asset management scale is as high as 5.5 billion. Dollar.

If you count the $1.6 billion Xiaoman No. 1 and the $3 billion Daxue No. 1, by next year, the scale of Envision Capital’s hedge fund business alone should break through the $10 billion mark. "

Liu Hai said with a smile: "You don't have to wait until next year, it has already broken through the $10 billion mark.

Darren, you forgot that Daxue No. 1’s initial capital of US$3 billion for shorting subprime mortgages has almost turned into US$10 billion. "

Xia Jingxing smiled, "Yes, I almost forgot about it."

Liu Hai seemed to know what Xia Jingxing wanted to say, and said, "As long as the asset management scale is doubled on the current basis, Vision Capital will be able to rank among the top ten hedge funds in the world, reaching the same level as Renaissance and Soros Fund. same level."

Hearing this, even Jiang Ping, who is relatively indifferent, couldn't help showing a smile. If he really achieved this brilliant achievement, then as one of the founders, he can be regarded as realizing his ambition for many years. Life on Wall Street adds a rich and colorful achievement.

The smile on Abel's face was very bright. Although the tens of billions of fund-of-funds plan fell through, it seemed that it would not have any impact on the strong rise of Vision Capital.

"Being among the top ten hedge funds in the world is our next important development goal. Only when we achieve this step can we truly have a place in Wall Street where there are many giants."

Xia Jingxing encouraged, "Looking at the product lines of Vision Capital, hedge funds are our fastest growing and best department, and also the pioneer and cornerstone of the entire group.

Now, the closer we are to success, the more we cannot take it lightly!

Everyone will work hard for a while, and when all the investment plans for subprime mortgages are completed, I will host a celebration banquet for you.

In addition, I decided to take out 10% of the profits generated by the hedge fund business department as a bonus pool, and everyone will be rewarded for their merits! The original bonus is still issued, not included in this award. "

Abel's eyes lit up. How much profit can a few hedge funds create for the company after deducting the LP principal and dividends?

He estimated that there must be at least two or three billion dollars, right? The bonus pool is at least two to three billion US dollars.

Moreover, the fund manager also has a share of the income of the fund in charge!

If the two are superimposed, the fund manager's income may reach hundreds of millions of dollars.

Thinking of this, Abel looked enviously at Jiang Ping and Liu Hai, the two generals who were fighting on the front line. As a logistics staff, he certainly couldn't get as much as the two of them, but he can still think about 10 to 20 million US dollars, right?

Liu Hai and Jiang Ping looked at each other, then looked at Xia Jingxing, nodded together and said, "Dailun, we and the team will do our best!"

"I'll do my best too!" Abel waved his fist. He didn't forget to express his opinion at this critical moment. Now he is trying to make a good impression in front of the boss, and maybe he will get more bonus points in the future.

"Okay, I won't say anything superfluous, the goal is already very clear, everyone guard against arrogance and impetuosity, keep working hard!"

Facing Xia Jingxing's gaze, the three of them nodded heavily.