Hedge Fund Articles

Hedge Fund Performance & Management Fees

Hedge funds typically earn income through a variety of fee structures charged to their clients. These fees are not only meant to cover fund administrative and operating costs, but also to reward employees and managers for providing positive returns to investors. The most common and well-known hedge fund fee structure combines both management and performance-based fees. First, the “management” fee [...]

Hedge Fund Insurance: A Good Investment?

Hedge Fund managers spend endless amounts of time and money analyzing and determining the appropriate investments to hedge risk in their portfolios. Can any manager afford to disregard the risks in their business? Originally set-up by Alfred Jones in 1949 to eliminate risk by holding long positions and short-selling other stocks, the Hedge Fund industry has mushroomed in size to [...]

Think. Outsource. Trade. Investment Outsourcing for the Hedge Fund World

By Seth Berlin Thanks to globalization for adding another acronym to my already information-overloaded brain. This one is called “IRO” or Investment Research Outsourcing. Over the next five years it is an acronym you will hear again and again. IRO, loosely defined, is the offshoring of front-office work to a 3rd party provider.  In this article, I will look at [...]

Hedge Fund Jobs – Portfolio Manager

There are many positions within a hedge fund that contribute to its overall success or the lack there-of. But while every player may be integral, hedge funds are a lot like a football team. The failure or success ultimately will be placed on the coach…or in this case, the Portfolio Manager. The Portfolio Manager, or hedge fund manager as they [...]

Hedge Fund Jobs – Quant

Quantitative analysts, or “quants” as they are referred to in the industry, are the brains behind complex hedge funds and the smooth talking managers who run them. Their main responsibility is to create complex trading strategies to work in securities markets around the globe. Since hedge funds may invest in anything and everything through an array of unique and unconventional [...]

Hedge Fund Jobs – Analyst

Due to the usually large amount of assets that hedge funds manage, they are under intense pressure from investors to produce enviable returns. After all, the investor is paying hefty fees for the shrewdness and brilliance of the hedge fund manager. The investor is entrusting the manager with a substantial amount of capital and counting on him to produce results [...]

Hedge Fund Jobs – Compliance Officer

In 2004, the Securities and Exchange Commission outlined a series of compliance requirements to be fulfilled by hedge fund advisors. A compliance department ensures that the employees are abiding by these rules set in place by the SEC, with the Chief Compliance Officer heading the task. Hedge funds have a few options. They may outsource this task to compliance professionals [...]

Starting a Forex Hedge Fund

Market conditions have never been better for setting up a forex fund. The number of forex funds and corresponding investors has grown as a result of expanding customer markets. Therefore, traders interested in starting a forex fund (or managing customer accounts) should familiarize themselves with the legal landscape as they consider earning a living in this profitable retail industry. An [...]

Starting an Offshore Fund

By Hannah M. Terhune, Esquire 2008©, hterhune@capitalmanagementservicesgroup.com Capital Management Services Group Many countries are competing against each other to provide the best playing field from a legal standpoint for private investment (hedge) funds. For a new, low budget offshore fund, Anguilla or the British Virgin Islands and not the Cayman Islands may well be the best choice. While many countries [...]

Hedge Fund Due Diligence

Hedge funds are limited to a specific group of sophisticated investors mainly because they are thought to have more experience with markets and investing. However, hedge funds aren’t without risk. While you can’t control market conditions, you can control who you choose to handle your money. Weeding out the bad apples can be one of the most important aspects in [...]

Largest Hedge Funds

While hedge funds are estimated to manage almost $3 trillion in assets, the top hedge funds are responsible for a large chunk of that number. In fact, the largest hedge funds manage about $1.6 trillion, more than half of total assets under management. Despite hedge funds losing a combined $24 billion in 2007, total assets grew over 30% from the [...]

The Subprime Mortgage Crisis – What Happened

In 2007, it was impossible to turn on the news without hearing about one of two things. Britney Spears, or the subprime mortgage crisis. While both debacles got an equal share of press and public scrutiny, the subprime mortgage crisis is still reeking havoc on the economy, and so far, has cost banks upwards of $285 billion. It was the [...]

Forex hedge funds

Over $3 trillion dollars is traded every day on the foreign exchange market. This market, also called Forex, exists whenever one currency is traded for another. Big players in this market include large banks, governments, central banks, corporations, currency speculators, and hedge funds. Top 10 Currencies Traded U.S dollar Euro Japanese yen British pound sterling Swiss franc Australian dollar Canadian [...]

Hedge Fund Risk

The term “hedge fund” was originally coined due the fact that managers would try to hedge the funds against risk in the market by taking both long and short positions. However, risk is almost impossible to avoid in today’s volatile economy, though hedge fund managers do try to use various risk control tactics. There are so many different strategies employed [...]

Hedgeducation 101
  • Hedge Fund Performance & Management Fees

    Hedge funds typically earn income through a variety of fee structures charged to their clients. These fees are not only meant to cover fund administrative and operating costs, but also to reward employees and managers for providing positive returns to investors. The most common and well-known hedge fund fee structure combines both management and performance-based fees. First, the “management” fee [...]

  • The History of Hedge Funds

    In 1949, Alfred Winslow Jones devised and implemented an investment strategy that would forever brand him as “the father of the hedge fund industry.” While working for Fortune Magazine and investigating financial strategies, Jones decided to launch his own fund and raised a total of $100,000, $40,000 of which was his own money. Jones employed two strategies still used heavily [...]

  • How Do Hedge Funds Work?

    While there is no specific formula for how hedge funds work since different hedge funds employ a multitude of different strategies, there are some common characteristics that are present in most hedge funds. All hedge funds start with a hedge fund manager. This manager brings a specific strategy or investment philosophy to the table. Maybe he chooses to use leverage, [...]

  • What is a Qualified Client?

    With regards to hedge fund investing, an accredited investor is not to be confused with a “qualified client.” Qualified Clients are the most attractive investors for hedge fund managers. They must meet one of the following criteria: A natural person who or a company that immediately after entering into the contract has at least $ 750,000 under the management of [...]

  • What is an Accredited Investor?

    Due to the risky nature of hedge funds, the Securities and Exchange Commission requires that investors meet certain minimum requirements. An “accredited investor” must meet one of the following prerequisites as defined by the SEC: a bank, insurance company, registered investment company, business development company, or small business investment company an employee benefit plan, within the meaning of the Employee [...]

  • Private Equity Funds

    Private equity funds are funds made available to a limited group of high net worth investors, making them similar to hedge funds. Private equity funds are similar to hedge funds in that both require a sufficient initial investment, usually around $1 million. However, while there are some similarities, hedge funds do vary from private equity funds. Hedge funds usually aim [...]

  • Prime Broker

    Prime Brokerage is the generic name for a bundled package of services offered by investment banks to hedge funds. The business advantage to a hedge fund of using a Prime Broker is that the Prime Broker provides a centralized securities clearing facility for the hedge fund, and the hedge fund’s collateral requirements are netted across all deals handled by the [...]

  • Fund of Funds

    A Fund of Funds, by definition, is a fund that invests in other hedge funds, rather than in individual securities.  Any fund that pools capital together, while utilizing two or more sub managers to invest money in equity, commodities, or currencies, is considered a Fund of Funds. Investors allocate assets to Fund of Funds products mainly to diversify amongst the [...]

  • Hedge Fund Strategies

    Aggressive Growth: Invests in equities expected to experience acceleration in growth of earnings per share. Generally high P/E ratios, low or no dividends; often smaller and micro cap stocks which are expected to experience rapid growth. Includes sector specialist funds such as technology, banking, or biotechnology. Hedges by shorting equities where earnings disappointment is expected or by shorting stock indexes. [...]

  • What are Family Offices?

    Family offices are exclusive wealth management firms which primarily only accept clients with at least $10-$25M in assets.  Although family offices typically manage finances for a smaller pool of clients, they are able to provide services in a wide variety of areas such as comprehensive tax and estate planning, charitable giving, foundations, budgeting, and traditional wealth management.  Family offices traditionally [...]