| You read and hear a lot about hedge funds. | | | | manager is paid. Regular mutual fund managers |
| Unfortunately, most of what you hear is negative | | | | are paid on how much money they manage and |
| because it comes from the major media that has | | | | NOT on performance. Hedge fund managers |
| an interest in reporting negatives about them | | | | usually receive 1% of the fund assets that goes |
| because the major media is supported by | | | | for expenses and 20% of the profits they make |
| so-called standard mutual funds and brokerage | | | | for their investors. In other words if they don't |
| companies that spend big bucks foradvertising. | | | | make a profit for you they don't get paid. I sure |
| Hedge funds are NOT allowed to advertise. | | | | would like to see them do that in regular mutual |
| First of all a hedge fund is almost identical to a | | | | funds, but the Securities and Exchange |
| mutual fund. There have actually been fewer | | | | Commission is the captive of the mutual fund |
| fraud complaints about hedge funds than about | | | | industry so don't hold your breath. The true ability |
| mutual funds. That doesn't mean they don't lose | | | | of fund managers would be exposed and many |
| money just as regular mutual funds do. | | | | funds would disappear as the smart investors |
| The underperformance of mutual funds is not | | | | would be transferring their money to fund |
| highlighted in the press; you don't bite the hand | | | | managers who have winning records every year. |
| that feeds you. I'm talking about advertising | | | | Yes, every year. No more of the nonsense of |
| revenues. Would Janus, Invesco, Vanguard or any | | | | how they beat the S&P500 by 5% yet lost |
| big fund family continue to place advertising dollars | | | | your money. |
| with someone who told stories about their losing | | | | So many of the hedge fund articles say the |
| funds or recommended that investors sell them | | | | investors are being hood winked into putting |
| to find a better performer? Hardly. | | | | money into these funds. I don't think so. Almost |
| Mutual funds use customers' money to buy stock | | | | every big state and corporate pension plan, |
| and bonds. Hedge funds are not limited to what | | | | university endowment, charitable trust and other |
| they can buy. The can buy or short sell | | | | large financial plans have money in hedge funds. |
| derivatives, commodities, options, oil and gas | | | | Like any cautious investor they did their due |
| leases, freight rates and even take an investor's | | | | diligence to find out the track record and |
| money to the race track (although I doubt if they | | | | management capabilities of the hedge fund. |
| would). The managers of these funds are | | | | You have to be rich to put money into a hedge |
| specialists in their field of knowledge and many do | | | | fund. They require an income of $200,000 per |
| extremely well. Just because they are different | | | | year and assets of one million or more. Many |
| doesn't make them bad. Like all investments you | | | | require large initial investments. |
| must know where your money is going and how | | | | If you qualify they are definitely a better place |
| it is going to be invested. | | | | than a regular mutual fund, but you must do your |
| The one major difference is how the fund | | | | due diligence. |