HEDGEDUCATION - HEDGE FUND ARTICLES

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

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 the investment … 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

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 … 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 one that invests in other hedge funds. Rather than investing in individual securities, a Fund of Funds invests in other hedge … 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 that usually only accept clients with at least $10-$25M of investible securities. They typically have less total clients but spend more time with each client often assisting with tax, estate planning, charitable giving, foundation, and even budget issues in addition to traditional wealth management services. The costs are … 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, starting a hedge fund is easier than ever. Most of the consulting work can now be done via the internet or the telephone. It’s … Continue Reading

Funds structured under foreign law, or located outside the U.S. are designated as “offshore hedge funds.” Offshore funds have several advantages. One advantage is that the fund and its investors are not subject to United States taxation. Another advantage is that since the number of accounts in a U.S. hedge fund is limited, offshore funds … Continue Reading

When looking at 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 … Continue Reading

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.
Therefore hedge fund managers rely upon hedge fund advisory services to introduce capital and distribute hedge funds directly to qualified clients. … Continue Reading

A hedge fund is a private investment fund open only to sophisticated investors. Depending on the type of the fund, the investor would need 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 … Continue Reading