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Here are some simple guidelines for those who would like to set up forex hedge fund. But firstly, you need to consider who your investors are before progressing to the next step. You need to understand several characteristics of hedge fund namely trading strategies, fees and taxation.

Trading strategies can be divided into traditional, non-traditional as well as pooled investment vehicles while taxation comes in two categories which are pass-through taxation and allocation for performance fees.

Besides that, you are also required to identify structural issues concerning hedge funds. Of course, as mentioned earlier, find out the fund investors and calculate the initial investments. Also, determine withdrawal and contribution periods from monthly, quarterly to yearly. Other issues worth considering are management registration status, commissions, expenses and reports to be issued to investors.

Only several parties can participate in providing hedge fund which is lawyer, administrator, accountant, consultant and broker. Lawyer plays an important role to sketch the required legal documents and offer legal advice while administrator needs to prepare report and determine fees and expenses. Consultant must be available to offer services such as marketing to companies and lastly, broker is the sole caretaker of properties.

Among some of the offering documents required for hedge fund are limited partnership agreement (LPA), subscription documents and private placement memorandum (PPM). LPA is meant to oversee legal documents, subscription documents offer answers to investor suitability while PPM contains discussion on structural terms and investment programme. In fact, PPM resembles mutual fund prospects.

Finally, here are instructions for those who would like to get started with hedge funds. First and foremost, register as a Commodity Pool Operator (CPO). Perhaps, you should check out www.iard.com as the website will guide you to complete the rest of the process.

Sketch out your investment strategies and methods and identify what are your objectives for fund investment. These will guide you as you progress to the subsequent step. If you intend to establish commodity hedge fund, remember to register as a member of National Futures Association (NFA). Most importantly, get a copy of each legal document (LPA, PPM and subscription documents) from your firm in-charge of the fund.