1.4.4
Dono markets mein profit dhundte hain, lekin key difference yeh hai ki kiska paisa risk mein hai .
Ek hedge fund doosron ka paisa (investors/clients ka) manage karta hai ek fee aur profit ke cut ke liye.
Ek prop (proprietary) trading firm apna khud ka capital trade karta hai aur saara profit rakhta hai (aur saara loss bhi).
Ek pooled investment vehicle jo accredited/institutional investors (ameer individuals, pensions, endowments) se capital collect karta hai aur diverse strategies (long/short, arbitrage, macro, event-driven) deploy karta hai absolute returns generate karne ke liye — profit chahe broad market upar jaye ya neeche.
Definition Proprietary (Prop) Trading FirmEk company jo financial instruments ko apne paison se trade karti hai (firm ka khud ka capital, na ki client deposits) direct profit banane ke liye, aksar high-frequency , market-making, ya arbitrage strategies ke zariye.
Intuition "Hedge" hedge fund mein kyun?Originally yeh funds bets "hedge" karte the — jaise achhe stocks khareedna (long) aur bure stocks short-sell karna — taaki agar poora market crash bhi kare toh spread par profit mile. Yeh naam atak gaya, bhale hi aaj kai modern hedge funds mushkil se hedge karte hain.
Markets ko do cheezein chahiye: capital aur liquidity .
Investors aisi returns chahte hain jo plain index se zyada ho , khaaskar returns jo market se uncorrelated hon taaki crash sab kuch na uda de.** → Yeh demand hedge funds banati hai.Markets ko koi aisa chahiye jo hamesha khareedne aur bechne ko taiyaar ho taaki trades instantly ho sakein. → Isse market-makers bante hain, jo ek core prop-firm role hai.
Intuition Absolute-return ka WHYEk mutual fund shaan se kehta hai "humne market ko 2% se beat kiya" chahe market 20% gir gayi ho (matlab tumne 18% khoya ). Ek hedge fund promise karta hai absolute terms mein paisa banana — upar wale saalon mein BHI aur neeche wale saalon mein BHI. Yeh zyada mushkil hai, isliye zyada charge karta hai.
Classic model ko Two and Twenty kehte hain.
Worked example Worked example 1 — ek achha saalFund manage karta hai A = \ 100m , e a r n s
Mgmt fee = 0.02 \times 100 = \ 2$m. Yeh step kyun? Assets par charge hota hai, profit par nahi.
Profit = 0.15 \times 100 = \ 15m . P er f f ee Kyun? Gain ka 20% cut.
Investor net return = 0.8 ( 0.15 ) − 0.02 = 0.12 − 0.02 = 0.10 = 10%
Fund ne \ 5$m pocket kiya; investor ko 15% ki jagah 10% milta hai.
Worked example Worked example 2 — ek bura saal ("fund ko koi downside nahi" wale darr ko steel-man karna)A=\ 100m ,
Mgmt fee phir bhi = \ 2$m. Kyun? Management fee unconditional hai — yahi is model ki criticism hai.
Perf fee = \ 0$ (koi profit nahi). Kyun? 20% sirf gains par apply hota hai.
Investor return = − 0.10 − 0.02 = − 12% aur fee dono bhugatata hai.
Isliye high-water marks exist karte hain (mistakes dekho).
Prop market-makers bid-ask spread se profit karte hain, fees se nahi.
Worked example Worked example 3 — market-makingStock quote: bid ₹100.00 ₹100.05 = ₹0.05 100 10 , 000
Volume per trip = 100 Kyun? Yahi Q
Profit = 10 , 000 × 100 × 0.05 = ₹50 , 000 Kyun? Spread har round trip mein earn hota hai.
Dhyan do: koi client nahi, koi 2-and-20 nahi — yeh saara firm ka apna paisa aur apna profit hai.
Feature
Hedge Fund
Prop Firm
Kiska paisa?
Investors' (LPs)Firm ka apna
Revenue
Fees (2 & 20)
Trading P&L / spread
Regulation
Investors ko report, disclosure
Halka (koi baahri clients nahi)
Typical horizon
Din → saal
Micro-seconds → din
Firm ko key risk
Investors ko kho dena
Apna capital kho dena
Common mistake Common misunderstandings (Steel-man → Fix)1. "Hedge funds hamesha hedge karte hain / low-risk hote hain." Kyun sahi lagta hai: naam literally hedge kehta hai. Fix: Kai concentrated, highly-leveraged, risky bets lagate hain. "Hedge" historical hai, risk guarantee nahi.
2. "Prop firms mere savings ek mutual fund ki tarah manage karte hain." Kyun sahi lagta hai: dono markets trade karte hain. Fix: Ek true prop firm koi baahri client money nahi leta — tum us mein invest nahi kar sakte.
3. "Performance fee matlab fund mera loss share karta hai." Kyun sahi lagta hai: profits ka 20% symmetric lagta hai. Fix: Yeh gains ka 20% leta hai lekin losses ka 0% High-water mark rule isko partially correct karta hai: fund dobara performance fee tab tak charge nahi kar sakta jab tak woh pichhle losses recover karke previous peak se upar na aa jaye.
4. "AUM = firm ka apna paisa." Fix: AUM (Assets Under Management) ek hedge fund ke liye clients' paisa hota hai; firm ka apna paisa iske comparison mein bahut chhota hota hai.
Recall Feynman: ek 12-saal ke bacche ko samjhaoDo nimbu paani bechne wale bacchon ki soch.
Baccha A (hedge fund) padosiyon se paisa leta hai nimbu khareedne aur lemonade bechne ke liye. Jo bhi profit aata hai, Baccha A ek chhota cut rakhta hai aur ek fixed "helper fee." Agar lemonade flop ho, padosi apna nimbu wala paisa kho dete hain — Baccha A ne phir bhi helper fee le li.
Baccha B (prop firm) nimbu ke liye apni pocket money use karta hai. Har glass thoda sasta khareedta hai aur thoda mahenga bechta hai, hazaaron baar, saara profit rakhta hai — lekin agar flop ho, sirf uski apni pocket money jaati hai.
Toh: hedge fund = doosron ka paisa fees ke liye; prop firm = apna paisa spread ke liye.
Mnemonic Difference yaad rakhne ka tarika"HF = Handles Foreign (others') money for Fees; PROP = Personal Risk, Own Pocket."
Aur fees ke liye: "Two to keep the lights on, Twenty to share the win."
Hedge fund aur prop trading firm ke beech core difference kya hai? Ek hedge fund doosron ke (investors ke) paison ko fees ke liye trade karta hai; ek prop firm apna khud ka capital trade karta hai aur saara P&L rakhta hai.
"Two and Twenty" ka matlab kya hai? 2% annual management fee on assets + 20% performance fee on profits.
Kya management fee ek losing year mein bhi charge hoti hai? Haan — 2% unconditional hai; sirf 20% performance fee ke liye profit zaroori hai.
Ek profitable saal ke liye 2-and-20 ke under investor ka net return derive karo. r n e t = r − 0.02 − 0.20 r = 0.8 r − 0.02
Agar ek fund 15% gross earn kare, toh 2-and-20 ke under investor ka net return kya hoga? 0.8 ( 0.15 ) − 0.02 = 10%
High-water mark kya hota hai? Ek rule jo fund ko performance fees charge karne se rokta hai jab tak woh pichhle losses recover karke apni previous peak value se upar na aa jaye.
Hedge fund ko "hedge" fund kyun kaha jaata hai? Historically yeh achhe assets long aur bure assets short karke hedge karta tha taaki market direction ki parwah kiye bina profit ho.
Ek prop market-maker paisa kaise kamata hai? Kai trades mein bid-ask spread capture karke: profit ≈ spread × quantity × number of round trips.
"Absolute return" ka matlab ek mutual fund ke goal se alag kya hai? Upar wale AND neeche wale dono markets mein positive paisa banana, na ki sirf ek benchmark index ko beat karna.
Kya ek retail investor apni savings ek prop trading firm mein laga sakta hai? Nahi — ek true prop firm koi baahri client money nahi leta.
Performance fee ko asymmetric kyun criticize kiya jaata hai? Fund gains ka 20% leta hai lekin losses ka 0%, isliye risk aur reward equally share nahi hote.
