Are Hedge Funds Right For You?
(ContentDesk) August 30, 2005 -- Hedge Funds have been a hot investment lately. Once reserved for the very wealthy, hedge funds now have minimum investments as small as $10,000. Should you jump on board the hedge fund bandwagon, or let this latest investment craze pass you by?Hedge funds are pools of private money that use specialized investment strategies in an attempt to earn greater returns for their investors. They can invest in just about anything in an attempt to make money. Usually, hedge fund strategies include the ability to short the market so they can profit by correctly timing market declines.Hedge funds have become popular because, historically, some have returned over 20% per year.
As a result, the number of hedge funds has grown dramatically the last few years. Many successful mutual fund managers have left fund companies and started their own hedge funds. Since hedge fund managers often receive as much as 20% of the gains, the managers can make a lot more money.Hedge funds are normally structured as a partnership or a limited liability company. As such, only ?accredited' investors can participate. An accredited investor is someone with over $1,000,000 in investable assets or an annual income over $200,000 per year.Not a lot of people fall into this category.
And Wall Street knew those high returns would be an easy sell to other investors. So they created a fund of hedge funds. Think of it as a mutual fund that invests in hedge funds. Voila, small investors now have access.Don't let the attraction of high returns tempt you into investing in a hedge fund or a fund of hedge funds. I believe they are unsuitable for almost every investor.
Here's why.First, those sky-high returns were achieved when there were a small number of hedge funds pursuing each strategy. Now there are so many hedge funds pursuing similar strategies, the returns aren't there. Worse, it's forcing managers to pursue even riskier strategies.It's like being at an auction. If you are the only one bidding you'll probably get a great deal. If you are one of a hundred different bidders there's not much chance of getting a bargain.
In fact, if you don't watch out you might even pay more than the item is worth. That's what has happened in the hedge fund world.Very few hedge funds have current returns anywhere near those stellar returns of the past. In fact, it's been reported that the majority of hedge funds have actually performed worse than the market indexes for much of this year. Some have even closed down and returned the money to their investors because they couldn't meet their objective.Hedge funds have very high costs. Whereas an expensive mutual fund might charge a 1.5% management fee per year, the typical hedge fund charges 2%.
Plus, the hedge fund manager will typically take 20% of any gains. It's even worse with a fund of hedge funds because there is an additional layer of fees. You take the risk, they take the reward.Hedge funds and funds of hedge funds have little regulation and even less disclosure. The potential for fraud is high and transparency is low. Investors are trusting someone they don't know to handle their money and will have little idea what they are doing with it.
Big money investors get info the small investor can't.Most hedge funds require that you remain invested for a set period of time?say 1 year. If investors start withdrawing their money, it may force the manager to sell investments at a loss, harming the investors that remain.Since hedge funds with long histories of stellar returns are closed to new investors, you'll have to take a chance on managers with little or no experience in the Wild West world of hedge fund investing.Lastly, for those who must have alternative strategies, there are many options to short the market or to get double the market return through mutual funds offered by Rydex and Profunds. These mutual funds are transparent, regulated and much, much less expensive. Even so, they still aren't for the faint of heart!So I recommend investors let the hedge fund bandwagon pass them by.Have a financial question? Send me an email and I'll personally respond, free of charge. Go to www.guardingyourwealth.com and click on ?Ask Jeff'.In addition to being a nationally syndicated columnist and Certified Financial Planning Practitioner, Mr.
Voudrie provides personal, private money management services to clients nationwide.Looking for an energetic expert who is passionate about financial and wealth management?
Mr. Voudrie is an excellent speaker who will excite and inspire your audience.
Mr. Voudrie is available for a limited number of speaking engagements, television appearances and radio talk shows.
For booking information, email e-mail protected from spam bots.Related Articles can be found at www.guardingyourwealth.com under the Guarding Your Wealth Article Archive..
Energy Hedge Fund Center Announces New Online Seminar: Investment Opportunities in the Energy & Environmental Value Chain: Hedge Funds, VC and Private Equity
Houston, TX (ContentDesk) March 14, 2006 -- The energy hedge fund center, LLC (EHFC) is to conduct a new online seminar on April 18th, 2006 on Investment opportunities in the energy and environmental value chain: hedge funds, VC and private equity. The seminar will take place at 1pm EDT.Over the last two years, the energy industry has literally been transformed into the hot investment sector. Today, with high and volatile energy commodity prices impacting everyone, energy is in the news headlines 24/7. On a daily basis, new investment opportunities in the energy industry are offered in the form of energy or natural resource-specific mutual funds, electronically traded funds (ETFs), income and royalty trusts, Master Limited Partnerships (MLPs) and, other vehicles. Yet these new vehicles only scratch the surface of the potential returns available in the alternative investment universe via energy and environmental hedge funds.
In this Phone & Web seminar, the authors of the new...
Energy Hedge Fund Center Announces New Online Seminar: Investment Opportunities in the Energy & Environmental Value Chain: Hedge Funds, VC and Private Equity
Hedge funds > Energy Hedge Fund Center Announces New Online Seminar: Investment Opportunities in the Energy & Environmental Value Chain: Hedge Funds, VC and Private Equity
New Energy Hedge Fund Center Online Seminar Announced ?Fundamentals of Energy Hedge Funds?
The Energy Hedge Fund Center (EHFC ? www.energyhedgefunds.com), the leading online source for news and information on hedge fund activities in the energy industry, has announced that its staff will be conducting an online seminar on "Fundamentals of Energy Hedge Funds" on March 15th, 1pm EST.
The online seminar will be conducted by EHFC Director's and co-authors of the first two comprehensive reports on energy hedge funds, Dr. Gary M. Vasey and Mr. Peter C.
Fusaro. They will share some of their latest research on energy hedge funds."Oil prices continue at record levels and there remains speculation in the media regarding the role played by hedge funds and other speculators," reports Dr. Gary M. Vasey, who is VP Trading & Risk Management Practice for energy industry analysis and consulting firm UtiliPoint International, Inc.
"Our online seminar will explain what an energy hedge fund is...
Hedge funds > New Energy Hedge Fund Center Online Seminar Announced ?Fundamentals of Energy Hedge Funds?
Energy Hedge Fund Center Now Tracking 450 Energy Hedge Funds
New York, NY
(ContentDesk) December 7, 2005 -- The Energy Hedge Fund Center (EHFC), the premier information source for energy and environmental hedge funds (www.energyhedgefunds.com) today announced that it is now tracking 450 hedge funds in the energy and environmental space including 200 funds focused exclusively on various energy strategies. EHFC staff believe that the true number is still higher as there has been a general rush to the energy sector on the part of many general funds over the last 18-months. We have been finding or been contacted by an average of about fifteen hedge funds per month since we started the directory of energy hedge funds," reports EHFC co-founder, Dr. Gary M. Vasey. While many are new funds some are existing funds that have exposed more of their assets under management to the energy sector. The EHFC directory of energy hedge funds is available to subscribers...
Hedge funds > Energy Hedge Fund Center Now Tracking 450 Energy Hedge Funds
The Hedge Fund Headache
The Hedge Fund HeadacheByHedge Funds are dangerous. They play with the D-bomb and Hedge Fund managersdon't know what they are doing. They are like children playing with alandmine in a sandbox. It's fun and exciting until the darn thing goes off.A D-bomb explosion would have the same impact on the global financialmarket, as an H-bomb would have denoted over Salt Lake City. The resultwould be a multi-century wasteland after the explosion.
A D-bomb explosionmeans that our Civilization will be facing a new multi-century Dark Age.The D-bomb is the Derivatives Market. In theory, derivatives are balancedrisk investments that allow Hedge Funds, banks, insurance companies andothers to profit from the spread created by the bet. The three designproblems with D-bombs are that the risk is usually an either or option thatdoesn't factor in a third alternative. Many bundled derivatives havecomponents that don't represent outside financial instruments that mighthave value after a D-bomb explosion....
The Hedge Fund Headache
Hedge funds > The Hedge Fund Headache
New Energy Hedge Fund Center Online Seminar Announced ?Fundamentals of Energy Hedge Funds?
The Energy Hedge Fund Center (EHFC ? www.energyhedgefunds.com), the leading online source for news and information on hedge fund activities in the energy industry, has announced that its staff will be conducting an online seminar on "Fundamentals of Energy Hedge Funds" on March 15th, 1pm EST.
The online seminar will be conducted by EHFC Director's and co-authors of the first two comprehensive reports on energy hedge funds, Dr. Gary M. Vasey and Mr. Peter C.
Fusaro. They will share some of their latest research on energy hedge funds."Oil prices continue at record levels and there remains speculation in the media regarding the role played by hedge funds and other speculators," reports Dr. Gary M. Vasey, who is VP Trading & Risk Management Practice for energy industry analysis and consulting firm UtiliPoint International, Inc.
"Our online seminar will explain what an energy hedge fund is...
Hedge funds > New Energy Hedge Fund Center Online Seminar Announced ?Fundamentals of Energy Hedge Funds?
FinLab SA and Barclay Group Join Forces
FinLab SA and The Barclay Group recently signed a Data License Agreement, allowing user's of FinLab's PackHedge? software to seamlessly retrieve data from Barclay's suite of hedge fund and managed futures databases. "Combining the PackHedge set of tools with timely and accurate hedge fund data from The Barclay Group creates a powerful solution for the growing and dynamic hedge fund sector," says Mr. Denis de Penthney O'Kelly CEO of FinLab SA.Sol Waksman, president of The Barclay Group, adds, "We're delighted to offer PackHedge subscribers direct access to our databases. We continually strive to increase the scope of our databases and improve data quality. FinLab clients can feel confident they have the best possible data for investment analysis and portfolio construction."FinLab SA provides advanced software products and services to investment professionals making asset allocation decisions on both hedge funds and traditional funds.
The Barclay Group compiles alternative investment...
FinLab SA and Barclay Group Join Forces
Hedge funds > FinLab SA and Barclay Group Join Forces
Are Hedge Funds Right For You? Hedge funds online degree
Are Hedge Funds Right For You?
Armchair Millionaire Community Bulletin: You Don't Have to Be Rich to Live Rich
Interesting work by Richard Easterlin, an economic historian at UCLA, found that even though the gross domestic product per capita in the U.S. has more than doubled in the last 50 years, there has been virtually no change in the percentage of people who call themselves happy. In other words, a lot more wealth hasn't given us any more happiness. I'd also assert that more income won't necessarily provide you with financial security, either. Whether they are conscious about it or not, many people...
Are Hedge Funds Right For You? ira Hedge funds
Hedge funds > Armchair Millionaire Community Bulletin: You Don't Have to Be Rich to Live Rich
Are Hedge Funds Right For You? Hedge funds skirts
Are Hedge Funds Right For You? Hedge funds plasma
Valentine's Day Tips - Top Ten Most Outrageously Expensive Valentine's Gifts 2006
Houston, TX (ContentDesk) February 8, 2006 -- Americans are set to dish out a staggering $13.7 billion this year on Valentines Day, according to the National Retail Federation (NRF). Jim Trippon, CPA and one of Americas foremost authorities on the money habits of self-made millionaires, has released his annual list of the most outrageously expensive gifts to give your significant other this holiday season. 
Are Hedge Funds Right For You? Valentine's Day Tips - Top Ten Most Outrageously Expensive Valentine's Gifts 2006
Hedge funds > Valentine's Day Tips - Top Ten Most Outrageously Expensive Valentine's Gifts 2006