Best Practices for Fund Managers
Launching a fund is easy. Running it well takes discipline. Here are guidelines for building and managing a successful strategy on Tilt Protocol.Portfolio Construction
Diversification
- Spread across sectors — Don’t put everything in tech. Mix sectors (technology, financials, healthcare, consumer) for natural hedging.
- Limit concentration — No single asset should dominate. A 40%+ position in one stock means your fund’s fate is tied to that one name.
- Use idle cash — A 10-30% cash buffer reduces volatility and provides a cushion for withdrawals.
Position Sizing
| Risk Level | Max Single Position | Suggested Assets | Idle Cash |
|---|---|---|---|
| Conservative | 15% | 10-20 | 20-30% |
| Moderate | 25% | 6-12 | 10-20% |
| Aggressive | 40% | 3-6 | 0-10% |
Token Limit
Vaults support up to 30 tokens. In practice, 8-15 is optimal:- Fewer than 5: too concentrated, high single-stock risk
- More than 20: diminishing diversification benefit, higher rebalance costs
Rebalancing
Frequency
- Too often: unnecessary trading costs and slippage
- Too rarely: portfolio drift reduces strategy effectiveness
- Sweet spot: weekly to monthly, or when any position drifts > 5% from target
After Weight Changes
Always rebalance after updating target weights. Otherwise, your fund holds the old allocation while displaying new targets — confusing for investors.Fee Strategy
- New fund managers: start with lower curator fees (40-60%) to attract initial deposits. Build a track record first.
- Established managers: higher fees (60-80%) are acceptable if you demonstrate consistent alpha.
- Consider your market: a simple index fund shouldn’t charge the same as an active alpha strategy.
Investor Communication
Even though Tilt is decentralized, good fund managers communicate:- Name your fund clearly — the name should communicate the strategy (e.g., “Tech Momentum” not “Fund 42”)
- Keep weights aligned with your thesis — if you name it “Blue Chip,” don’t fill it with meme stocks
- Be consistent — frequent radical weight changes erode investor confidence
Risk Management
The Time-Lock Is Your Friend
The weight change time-lock exists to protect investors. It also protects you:- Forces you to plan changes in advance rather than react emotionally
- Gives you time to reconsider before a change takes effect
- Builds investor trust through predictability
Monitor Share Price
Track your fund’s share price relative to the high-water mark. Performance fees only accrue above HWM, so drawdowns directly impact your fee revenue.Idle Cash as a Tool
Don’t think of idle cash as “wasted.” It’s a strategic instrument:- Reduce to 0% when conviction is high
- Increase to 30%+ ahead of uncertainty
- Use it for dollar-cost averaging into new positions