Sat, Apr 21, 2018
A A A
Welcome Guest
Free Trial RSS
Get FREE trial access to our award winning publications
Opalesque Futures Intelligence

CTAs Need a Plan to Succeed

Tuesday, September 17, 2013

By Diane Mix Birnberg


Diane Mix Birnberg is
founder of Horizon Cash Management and has served on numerous boards, including at the MFA, AIMA and CFTC. The firm is sponsoring a CTA Business Bootcamp at the UBS Center September 18 to kick off the CTA Expo.

Every emerging manager hopes to succeed. Yet, year after year while there are many new managers, there are still more that quietly decide to give up. Why?  There are reasons tied to poor performance, failure in raising assets and various other things.   The managers who endure for the long term give us clues to what makes a manager successful. Good performance certainly is a criteria but even the best have a bad year or bad years. One trait that seems to define this group of "the best and brightest" is that they planned to succeed. In other words, from the time the manager made the transition from a trader to an asset manager a plan was in place that covered elements that are necessary to run an assets management business.  It may not have been a formal written plan and may not have even been comprehensive but a plan was there to be revisited, expanded and refined over time.  Importantly, time was spent thinking about how their firms would be different and distinguishable from the rest of the manager universe.  While this exercise starts with the trading style, methodology, specialization etc. these managers go one step further by deciding how to convey this differentiation .  If they knew it or not at the time, they were creating their brand.

The power of creating a brand through differentiation is immense. Michael Porter, the guru of marketing strategy, noted in his work that finding a meaningful difference from one's competition and exploiting that difference in every expression and every communication is the only method to guarantee long-term success.  Taking the time early on to determine how your company is different and what sets it apart reaps benefits in the future.  Identifying those differences and communicating them in coherent, compelling and consistent ways is highly correlated to your company's survival.

 With the huge numbers of managers in many disciplines joining the fray every year, besides brand building, time must be allocated to developing a business plan.  It is now common for seed capital to ask for a business plan in their due diligence on emerging managers.  These asset allocators need to see a well thought out game plan for the business of managing assets in addition to a good track record.

There are numerous templates for business plans but all cover the same basic topics. You can think about these by using a set of seven questions as the starting point for your plan:

            Who will be my clients?
            What sets my investment product apart?
            What is my product's benefit?
            How will I make money?
            How will my business be structured?
            What employees are needed for my business?

Decide who you are as a manager and how your business is different from competition.

Then make a plan that capitalizes on your distinctiveness.  Plan for success!

The Business Plan Top Ten
1. Take time to think about your business
2. Find a business plan outline that suits your needs
3. Write your plan
4. While developing your plan, if you find potential weaknesses, now is the time to figure out how to fix these.
5.  Stress the actual implementation of the plan
6.  Follow your plan
7.  Be afraid of complacency or plan neglect 8.  Review and revise your plan at least every six months in the early years
9.  Always plan for the long game with action plans for the short game
10. Plan to succeed.

Diane Binberg, who has more than three decades' experience in the fixed income sector, founded Horizon Cash Management in 1991 and has presided over its growth ever since. She has been a featured speaker at investment industry conferences around the world and has written numerous articles for industry publications. Diane served as Director and Secretary of the Managed Funds Association (MFA), the 1000-member, U.S.-based association of alternative investment professionals. She also served as Council Member of the Alternative Investment Management Association (AIMA), a 1000-member global organization serving constituents on five continents and in 46 countries. In addition to chairing AIMA's International Development Group and MFA's International Advisory Council, Diane served as Vice Chairman for World Trading Day, a significant fundraising initiative for CARE, the international humanitarian organization. She has also been active in the 100 Women in Hedge Funds Association, and was named "Trendsetter of the Year" by that organization. Diane was also honored with appointments to the U.S. Commodity Futures Trading Commission's (CFTC) Global Markets Advisory Committee.



 
This article was published in Opalesque Futures Intelligence.
Opalesque Futures Intelligence
Opalesque Futures Intelligence
Opalesque Futures Intelligence
Today's Exclusives Today's Other Voices More Exclusives
Previous Opalesque Exclusives                                  
More Other Voices
Previous Other Voices                                               
Access Alternative Market Briefing


  • Top Forwarded
  • Top Tracked
  • Top Searched
  1. Investing - Sequoia takes Facebook stake as shares slide in data controversy, $1.4b hedge fund sees intact fundamentals for Facebook, Jim Cramer reveals some 'suggested hedge fund trades' amid the Trump tariffs[more]

    Sequoia takes Facebook stake as shares slide in data controversy From Bloomberg.com: The $4.2 billion Sequoia Fund bought a small position in Facebook Inc. as the stock slid late in the first quarter, investment manager Ruane, Cunniff & Goldfarb told clients. "The recent controversy enab

  2. Activist Investors - Blue Sky-owned Wild Breads faces uncertain future[more]

    From AFR.com: A Blue Sky private equity investment in artisan-style baker Wild Breads enjoyed multiple valuation upgrades despite losing millions and breaching its lending covenants, accounts lodged with the regulator last week show. Wild Breads lost $2.4 million in 2017, but Blue Sky ascribed a hig

  3. Opalesque Exclusive: Barnegat to close hedge fund to outside investors on weak opportunities[more]

    Komfie Manalo, Opalesque Asia: Bob Treue's Barnegat Fund Management said it is closing its $666m fixed income relative value hedge fund to outside investors. "The negative side to gains in Fixed Income Arbitrage is that unless we find new opportunit

  4. Investing - Hedge fund makes a big bet on malls, British hedge fund manager Odey short UK government bonds on QE bet[more]

    Hedge fund makes a big bet on malls From Barrons.com: The dominant narrative on American shopping malls is that they're dead. Crushed by Amazon.com, many brick-and-mortar retail stores are destined for bankruptcy. And where is the most retail, clustered all together? Malls. From a

  5. Performance - Hedge funds suffer first back-to-back loss in two years, Netflix performance burns hedge fund short sellers, Macro hedge fund up 14.5% in first quarter sees dollar falling, Renaissance Technologies rebounds across hedge funds in March[more]

    Hedge funds suffer first back-to-back loss in two years From Bloomberg.com: Hedge Fund returns sank for a second straight month in March, the first back-to-back loss since the first two months of 2016, as trade wars, tech-sector woes and a Fed rate hike dragged down the S&P 500 from its