What About the Hedge Fund Manager?
by sharon rockey
We've given you a few Hedge Fund basics--what they are and how they perform. But who are the savvy entrepreneurs that put these funds together and manage them?
The success of a Hedge Fund is almost entirely dependent on the expertise of the fund management team. Since Hedge Funds are private offerings with very little SEC regulatory constraints, the strategies they employ are virtually unlimited.
Hedge Fund managers tend to be highly specialized, disciplined and diligent, and they generally restrict themselves to a particular strategy. To achieve the highest returns for investors, they must demonstrate a high degree of success and expertise with that strategy.
Know What Questions to Ask
Before you invest in a Hedge Fund, look around for one that is in line with your goals and values. Who will be managing your investment? How long have they been successful? What is their investment philosophy? What strategies will the fund employ? How much of their own money is invested along with yours? What is their track record?
Look at the Track Record
Past performance does not guarantee that the same results will be achieved in the future, however, it can give the investor an idea of the type of returns the manager or fund is capable of achieving.
For instance, an attractive track record might look something like this:
- Superior risk management skills demonstrated
- 20.3% return on investment year-to-date, January 1, 2002 - August 9, 2002
- Profitable in both rising and declining markets
- Maximum draw down of 7% following September 11th
In fact, that is the track record for the management team of [company name temporarily withheld], a Hedge Fund to be offered in the near future.
We will be telling you more about that soon.
