HEDGEDUCATION - HEDGE FUND ARTICLES

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 … Continue Reading

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 … Continue Reading

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. … Continue Reading

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 … Continue Reading

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 … Continue Reading

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 … Continue Reading

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 … Continue Reading

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. … Continue Reading

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 … Continue Reading

You’ve done your research. You’ve studied the market relentlessly. You feel you have a strategy devised that will make your investors and yourself a lot of money. In today’s high-tech industry, it is easier than ever to start a hedge fund. Most of the consulting work can now be done via the internet or the … Continue Reading

Hedge funds structured under foreign law, or located outside the U.S. are designated as “offshore hedge funds.”  Managers who desire to start a hedge fund offshore can enjoy several advantages over their domestic contemporaries. One advantage is that the fund and its investors are not subject to United States taxation. Another advantage is that since … Continue Reading

When analyzing hedge fund performance, there are many factors to consider. Hedge fund managers classify their returns several different ways and it is important to consider all of these before ascertaining a ‘real’ number.
One distinction that is important to remember when interpreting hedge fund performance is whether the returns are net of fees, or are … Continue Reading

Hedge Fund Manager Capital Introduction
A hedge fund manager and/or any person acting on its behalf may not solicit an investment into a hedge fund through any type of “general solicitation” or general advertisement” under Section (c) of Regulation D.
As a result, an increasing number of hedge fund managers rely upon hedge fund advisory services … Continue Reading

A hedge fund is a private investment fund open only to sophisticated investors. Depending on the type of the fund, the investor needs to fulfill the requirement of “accredited investor” or “qualified client.” In most states, hedge funds are not required to register with the Securities and Exchange Commission and are therefore often … Continue Reading