| Hedge Funds are a bit funny; you have to
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| | often designed to mimic mutual funds, but
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| pay 3 to 4 percent for management fees
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| | at a much lower broker's fee. Look-alike
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| and other fees, plus about 20 percent of
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| | funds mimic ETF's relationship to mutual
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| the profit, yet more and more people are
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| | funds, by running profiles of the
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| crazy about them. For many years average
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| | investment strategies of various hedge
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| hedge fund returns were 11 percent
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| | funds and mimicking them. Then the broker
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| according to Business Week, but now the
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| | fee is only 1 or 2 percent, and there is
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| returns have become lower on the huge
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| | no whopping 20 percent profit fee. These
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| amounts invested in hedge funds. Maybe
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| | look-alike funds are definitely around,
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| there is too much competition. Many
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| | and if you ask your broker about them or
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| smaller investors are involved in hedge
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| | do a few Google searches, you can get
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| funds through fund of fund groups, which
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| | them. Although hedge funds total about
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| require as little as a $25,000
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| | $1.5 trillion in invested funds and
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| investment, as opposed to a $1 million
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| | mutual funds total much more money, about
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| investment directly in a hedge fund. A
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| | $8 trillion, hedge funds have an
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| fund of funds is a mutual fund that
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| | increased weight because of their use of
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| invests in several different hedge funds.
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| | leverage. At a ten to one ratios the
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| This gives an opportunity for smaller
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| | effective investment power of the hedge
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| investors, but the fees are higher, since
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| | funds can be greater than mutual funds.
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| there's one more level of management to
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| | To tell you the truth, if you read the
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| deal with. Altogether there is believed
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| | financial press, it is a bit of a mystery
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| to be $1.5 trillion in hedge fund money
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| | what exactly the frenzied attraction to
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| in about 8,000 different hedge funds.
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| | hedge funds actually is. They are
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| They are under increasing pressure to be
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| | invested in a combination of derivatives,
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| regulated after the largest collapse of a
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| | mergers and acquisitions, selling short
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| hedge fund ever, the Amaranth fund, which
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| | and some murkier deals in the
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| cost investors over $6 billion.
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| | "deregulated universe". The danger is, as
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| The other big thing hitting the markets
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| | predicted by some soothsayers in 2005,
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| is look-alike hedge funds, sometimes
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| | that some funds will over-leverage and
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| called ARFs (Absolute Returns Funds).
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| | take excessive risks and go bust. That is
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| These are similar to what ETFs, Exchange
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| | exactly what happened to Amaranth hedge
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| Traded Funds have been to mutual funds.
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| | fund that had a $6 billion plus blowout
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| ETFs are a basket of securities that are
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| | on the oil futures market.
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