Hedge Fund News From HedgeCo.Net

Taxes Raise Bar for a Hedge-Fund Bet

Bloomberg – Thanks to the Jumpstart Our Business Startups (JOBS) Act, thousands of hedge funds will soon start advertising to the millions of Americans who can theoretically afford to invest in them, but don’t. Investors should be careful.

A new report (not online, sorry) from Greenline Partners, which advises non-institutional savers and was cofounded by a former coworker of mine, explains that taxes paid to the government and fees paid to managers each eat about 30 percent of a hedge fund’s gross profits. Investors only keep about 40 percent. (The exact split depends on the size of those profits.) A fund that claims to generate 15 percent a year is really only giving you just 5.7 percent. Keep this in mind as you start to receive unsolicited sales pitches.

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