Graham Capital Management, L.P.
Founded by Wall Street leader Kenneth Tropin, Graham Capital Management is an alternative investment manager that follows both quantitative (trend-following) and discretionary (go-anywhere) strategies. Its hedge funds have been in the red in recent years, like many other quant investors.
In 2008, however, the firm was one of the few to predict the fall of Bear, Stearns & Co. and outperform because of its foresight. Currently, the firm manages billions in assets, according to its latest Form ADV.
Graham Capital Management Background
Tropin started Graham Capital with his own money in 1994, and continues to invest in his firm’s funds. Today, he largely owns the advisory through two entities, while other employees have small stakes.
The Rowayton, Connecticut headquarters are famously located at “Rock Ledge,” the former home of James Farrell, U.S. Steel president, and birthplace of one of the first business computers. The firm also has offices in London, UK and West Palm Beach, Florida.
Graham Capital appeared on Institutional Investor’s top 100 hedge fund list in 2016, ranking #56. In 2015, the CME Group and BarclayHedge gave Tropin a lifetime achievement award for his contributions to the managed futures industry.
In 2009, he was No. 15 on Forbes’ list of highest earners on Wall Street. (He reportedly pocketed $120 million from shorting the financial sector.)
Graham Capital Management Client Types and Minimum Account Sizes
Technically, Graham Capital’s clients are its private hedge and liquidity funds. The investors in these funds are generally "accredited investors," as defined by the Securities Act of 1933, or "qualified purchasers," as defined in the Investment Company Act of 1940. This means pensions, sovereign wealth funds, endowments, foundations and very wealthy individuals. The firm also advises investment companies.
The firm doesn't specify any minimum account size requirements.
Services Offered by Graham Capital Management
Graham Capital provides investment management to private funds and investment companies. Its hedge fund strategies are quantitative, discretionary or a blend of both and trade in global currency, commodity and other financial markets.
The firm is also a registered commodity pool operator and commodity trading advisor under the Commodity Exchange Act.
Graham Capital Management Investing Philosophy
As mentioned earlier, Graham uses quantitative and discretionary strategies. The former uses computerized mathematical models to find trends in technical information that can be profit opportunities. These strategies may involve high-frequency systems, counter-trend systems and non-trend systems.
On the other hand, the firm’s discretionary strategies generally involve global macro investments that are non-correlated with traditional assets. Primarily, these investments are traded on major futures exchanges, inter-bank currency and swaps markets, equity exchanges and OTC markets.
According to its website, the firm’s investment philosophy is based on three pillars:
- Strategy diversification
- Disciplined risk management
- Robust portfolio construction
Fees Under Graham Capital Management
Graham Capital collects management fees that are based a percentage of AUM. Depending on the fund, the annual percentage generally ranges from 0% to 3.5%. Additionally, the firm collects a quarterly performance-based fee that ranges from 0% to 30% of realized and unrealized gains (and losses).
|*Estimated investment management fees do not include brokerage, custodial, third-party manager or other fees, which can vary in amount. Fees amounts are based on the firm's maximum annual asset-based fee of 3.50%.|
|Estimated Investment Management Fees at Graham Capital Management*|
|Your Assets||Graham Capital Management Fee Amount|
|$500K||Up to $17,500|
|$1MM||Up to $35,000|
|$5MM||Up to $175,000|
|$10MM||Up to $350,000|
Learn more about advisors' typical costs here.
What to Watch Out For
In its most recent SEC filings, Graham Capital had no disclosures to report. Graham Capital manages assets for accredited investors and investment companies.
It does not work with small or inexperienced investors. It also does not provide financial planning or wealth management services. So if you are looking for a financial advisor who can help steer your personal finances, this firm is not the right fit.
Opening an Account With Graham Capital Management
To contact Graham Capital, call its headquarters at (203) 899-3400. Alternately, you can visit the contact page of the firm's website.
All information was accurate as of the writing of this article.
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