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, … Continue Reading
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 … Continue Reading
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 … Continue Reading
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 … Continue Reading
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 … Continue Reading
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 … Continue Reading
When trying to maximize absolute returns, the importance of assessing and mitigating risk shouldn’t be underestimated. Some memorable examples like LTCM and Tiger Fund not only show how heavy losses can be for some participants of the hedge fund industry, but also reinforce the perception that a good record of high absolute returns can mean … Continue Reading
When most people think of Bear Stearns, they think of its recent collapse and the resulting purchase by JPMorgan Chase. However, the demise of Bear Stearns can really be traced back to two failed hedge funds last summer which had a sort of domino effect on the entity of the company. Let’s take … Continue Reading
According to Wikipedia, a venture capital fund is a pooled investment vehicle (often in the form of a limited partnership) that primarily invests the financial capital of third-party investors in enterprises that are too risky for the standard capital markets or bank loans. Venture capital can also include managerial and technical expertise. Most … Continue Reading
The coveted list is here! Forbes magazine has named the World’s Richest, with 1,125 billionaires making the list… the most ever. Warren Buffet took the title of World’s Richest Man, with a fortune of $62 billion. Bill Gates was dethroned for the first time in 13 years, with assets equaling $58 billion.Not surprisingly, hedge fund … Continue Reading
By JAMES R. HEDGES, IV, PARTNER, AND CHARLOTTE LUER, PARTNER, LJH FINANCIAL MARKETING STRATEGIES, AND LUCINDA O. MCCONATHY, PARTNER, AND PATRICIA C. O’PREY, PARTNER, RICHARDS KIBBE & ORBE LLP
Marketing a hedge fund involves a myriad of considerations, including compliance not only with the regulatory requirements and restrictions of the jurisdiction in which the hedge fund … 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
There are estimated to be over 10,000 hedge funds in existence today. Because they are not regulated like mutual funds and other investments, information on these funds may be a lot harder to find. Another reason for the scarcity of hedge fund information lies in the fact that only accredited investors, qualified clients, … 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
Asset-based lending is a strategy employed by some hedge funds that has been gaining popularity in recent years. Asset-based lending is where a company (the hedge fund) loans another company a set amount of money, and that loan is backed by collateral (an asset).
Let’s say a builder is in the process of constructing a … Continue Reading
A hurdle rate is the minimum return necessary for a fund manager to start collecting incentive fees. The hurdle is usually tied to a benchmark rate such as Libor (London Interbank Offered Rate) or the one-year Treasury bill rate plus a spread.
Funds which specify a soft hurdle rate charge a performance fee based on the … Continue Reading
There has been a half dozen articles in the last year about private hedge fund platforms being setup or launched by firms such as the Man Group. There are really two types of hedge fund platforms being discussed. One allows hedge funds to trade almost any type of security through one portal and the other … Continue Reading
The hedge fund industry is intensively competitive. Depending on who you ask or who you cite there are now between 10,000 and 15,000 hedge funds now in the industry. This rivalry comes to a head while hedge funds compete for large investments by institutional investors. Institutional investors spend months analyzing the investment processes and information/research … Continue Reading
New hedge funds are launched daily, which is constantly increasing the importance of determining which hedge funds are appropriate for you or your firm to invest in becomes increasingly important. Every person or company is going to have different investment horizons, risk tolerances, strategy preferences, etc. so it is usually more valuable to know the … 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” … 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
In the hedge fund industry you have one name and one reputation. If you ruin that, you could have influential people in the industry refusing to do business with you for 15-20 years after their initial opinion is formed. In such a competitive, close vested industry where large profits can be made, the temptation … Continue Reading
Anyone who has the ability to successfully navigate the many channels of capital within the hedge fund industry is worth their weight in gold (and that’s rising every day). There are two major components of marketing and selling a hedge fund which each take constant attention and refining.
Understand the DNA of the many distinct distribution … 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
While both investment vehicles try to maximize gains and minimize risk for their clients, there are some significant differences between hedge funds and mutual funds. Mainly, mutual funds are limited to stocks, money market accounts, and bonds, though some exceptions can be made. This is why the market has such an impact on … Continue Reading
Internet websites have to be careful with respect to general solicitations and advertising, and thus must limit the content of the website in addition to the people who have access to the site. Hedge … 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
