Hedge Funds For Dummies
Investing December 17th, 2008Introduction
You’ve seen the headlines in the financial press. You’ve heard the rumors about mythical investment funds that make money no matter what happens in the market. And you want a part of that action.
I have to be upfront: Hedge funds aren’t newfangled mutual funds, and they aren’t for everyone. They’re private partnerships that pursue high finance. If you don’t mind a little risk, you can net some high returns for your portfolio. However, you have to meet strict limits put in place by the Securities and Exchange Commission – namely that you have a net worth of at least $1 million or an annual income of $200,000 ($300,000 with a spouse). Most hedge-fund investors are institutions, like pensions, foundations, and endowments; if you work for an institution, you definitely need to know about hedge funds. I also have to let you in on a little secret: Not all hedge fund mangers are performing financial alchemy. Many of the techniques they use are available to any investor who wants to increase return relative to the amount of risk taken.
