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Setting optimal Alpha price

Hi,

assuming after 2-3 month, I'd like to set optimal price for my Alpha. How can I do that? Are there some qualitative and/or quantitative criteria for finding optimal price?

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Hi Mykola, 

you could build a function of AUM, PSR and CAGR and apply your personal percentage fee on that function to determine a fair price for licensing your Alpha. Can't offer a concrete formula now. Just an idea. 

You can also orient yourself to the others. Your Alpha shouldn't be much more expensive than an Alpha with comparable performance/risk indicators but you should keep in mind that an Alpha with lower correlation to the competition and traditional benchmarks (such as SPY) is basically more valuable. 

In the end it has to pay off for the fund. So you could do some basic calculations and try out different values for AUM between 100k and 10 mio $ and a percentage fee between 10% and 30%. 

 

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The material on this website is provided for informational purposes only and does not constitute an offer to sell, a solicitation to buy, or a recommendation or endorsement for any security or strategy, nor does it constitute an offer to provide investment advisory services by QuantConnect. In addition, the material offers no opinion with respect to the suitability of any security or specific investment. QuantConnect makes no guarantees as to the accuracy or completeness of the views expressed in the website. The views are subject to change, and may have become unreliable for various reasons, including changes in market conditions or economic circumstances. All investments involve risk, including loss of principal. You should consult with an investment professional before making any investment decisions.


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