Hedge Fund Term Sheet
Prepared by: [YOUR NAME]
This Term Sheet outlines the basic terms and conditions for the establishment and operation of a hedge fund. The following provisions are intended for discussion purposes only and do not constitute a legally binding agreement. A formal agreement will be executed upon finalizing the terms.
Fund Overview
Fund Name: Quantum Strategies Hedge Fund, L.P.
Fund Manager:
Sovereign Wealth Advisors LLC will be responsible for the overall investment strategy and day-to-day management of the fund.
Launch Date: January 1, 2060
Fund Structure:
Limited Partnership The fund will be structured as a limited partnership under the laws of the State of Delaware, with Sovereign Wealth Advisors LLC serving as the General Partner.
Investment Strategy
Objective
The fund aims to achieve long-term capital appreciation through a diversified portfolio of investments across multiple asset classes, including but not limited to equities, fixed income, derivatives, and alternative investments.
Target Return
The fund targets an annualized return of 18% net of fees.
Investment Approach
The fund will employ a multi-strategy approach that includes long/short equity, global macro, and event-driven strategies. Leverage and derivatives will be used to enhance returns and manage risk.
Fees and Expenses
Management Fee
A management fee of 2% per annum of the net asset value (NAV) will be charged, payable quarterly in advance.
Performance Fee
A performance fee of 20% of the profits exceeding the high-water mark will be charged annually.
Expenses
The fund will bear all operational expenses, including but not limited to legal, accounting, audit, and administrative costs, estimated at 0.5% of the NAV annually.
Fund Terms
Minimum Investment
The minimum initial investment required is $2,000,000.
Lock-Up Period
Investors will be subject to a 24-month lock-up period during which redemptions are not permitted.
Redemption Terms
After the lock-up period, redemptions will be allowed on a quarterly basis with 90 days prior written notice.
High-Water Mark
The fund will implement a high-water mark provision to ensure that performance fees are only charged on net profits above the highest NAV previously attained.
Risk Factors
Market Risk
The fund's performance may be significantly affected by changes in market conditions, interest rates, and economic factors.
Leverage Risk
The use of leverage may magnify both gains and losses, leading to increased volatility in the fund's returns.
Liquidity Risk
Certain investments, such as private equity and real estate, may be illiquid, potentially affecting the fund’s ability to meet redemption requests.
Counterparty Risk
The fund may be exposed to credit risk through its counterparties, including brokers and financial institutions.
Governance and Compliance
Advisory Board
An advisory board consisting of 5 members will be established to provide strategic guidance and oversight. The members will include experienced professionals from the finance, legal, and investment sectors.
Compliance
The fund will adhere to all applicable regulations, including those under the Investment Advisers Act of 1940, and will maintain rigorous compliance policies and procedures. The fund will undergo annual audits by a reputable firm.
Subscription and Redemption Process
Subscription Process
Investors must complete and submit a subscription agreement along with the required documentation and initial investment. The subscription process will be managed by the fund's administrator, Global Fund Services Ltd.
Redemption Process
Redemption requests must be submitted in writing, following the redemption terms specified above. Redemption payments will be made within 45 days after the end of the relevant quarter.
Legal and Tax Considerations
Legal Counsel
The fund will engage Morgan, Lewis & Bockius LLP as its legal advisor.
Tax Considerations
Investors are advised to consult with their own tax advisors regarding the tax implications of an investment in the fund. The fund will be structured to optimize tax efficiency for U.S. and non-U.S. investors.
Confidentiality
All information provided in this Term Sheet is confidential and proprietary. Potential investors are prohibited from disclosing or distributing this information without prior written consent from Sovereign Wealth Advisors LLC.
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