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New Managers Authored by US law firm Seward & Kissel's Investment Management Group.

As new portfolio managers enter the hedge fund space with dreams of running billions of dollars in a traditional US/offshore master-feeder structure, many of these managers are encountering the asset raising headwinds that have permeated the industry recently. Accordingly, many of these managers have tamped down their longer-term ambitions in order to build an interim product in the short-term that will allow them to: (1) build a track record, (2) keep costs down, and (3) expand when the markets improve.

It's very important to be strategic in these efforts, as building an alternative investment management business in a haphazard fashion will make it more challenging to evolve to a fuller scale model. The following sets forth a number of approaches that are available that may help achieve these goals, along with recommendations worth implementing in order to avoid the common mistakes often seen in these scenarios:

1. Start with a US Standalone Fund Only

Managers may wish to consider keeping organizational costs down by launching just a US standalone fund at first, with language built into the governing documents allowing for unilateral conversion to a master-feeder structure at a later date (thereby eliminating the need to seek investor consent at conversion). A US standalone fund can accept capital from all types of investor......................

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