Thu, Jan 29, 2015
A A A
Welcome Guest
Free Trial RSS
Get FREE trial access to our award winning publications
Alternative Market Briefing

Other Voices: How not to invest in hedge funds (1)

Wednesday, March 31, 2010

Written by Bryan Goh of London-based fund manager First Avenue Partners LLP.

We all know what to look out for when contemplating a hedge fund investment.

- Independent administrators and independent valuation of assets and calculation of fund NAV. - Independent prime broker, reputable auditors and legal counsel. - Independent board of directors consisting of seasoned industry professionals - Rigorous processes, documented and inculcated throughout the team. - Independent risk management with a risk manager who can override the trader or portfolio manager. - Manager must invest a substantial portion of wealth in the fund. - Strong track record - Reference well - Etc - Etc

The list of criteria is endless, sometimes controversial, and sometimes even self contradictory.

This is NOT how to invest in hedge funds. It is a particularly poor way of investing in hedge funds, or any funds, or making decisions in general. Particularly in a field as complex as alternative investments, a process driven, checklist approach to investing, leads to mediocrity.

How To Invest In Hedge Funds:

Understand the Risks One cannot manage in ignorance. Understanding risk involves understanding the operational risks, fraud risks, regulatory risks, liquidity risks, market risks, funding risks, political risks, manager risk. It involves understanding which risks are acceptable and which are not.

Risk ......................

To view our full article Click here

Today's Exclusives Today's Other Voices More Exclusives
Previous Opalesque Exclusives                                  
More Other Voices
Previous Other Voices                                               
Access Alternative Market Briefing


  • Top Forwarded
  • Top Tracked
  • Top Searched
  1. Investing - U.S. investors favor currency hedged Europe ETFs as euro tumbles, Quants win back investors as Swiss franc fuels volatility gains, David Einhorn's $7bn hedge fund is loading up on this stock, Hedge fund BlueMountain Capital unveils Ocwen Financial short, claims default on notes[more]

    U.S. investors favor currency hedged Europe ETFs as euro tumbles From Reuters.com: U.S. investors stung by the falling euro who want to stay invested in Europe are turning to exchange-traded funds designed to strip out the impact of the region's currency. The biggest among so-called "cur

  2. News Briefs - Millennials use tech tools to jump into investing, Winklevoss twins to launch bitcoin exchange with FDIC insured deposits, Robertson’s legacy from hedge funds to New Zealand, Real estate managers exploring smaller open-end funds[more]

    Millennials use tech tools to jump into investing It is the Facebookification of monetary investing. From social networking platforms that enable young investors to stick to every other's stock-picking mojo, to internet sites for initially-timers hungry for a piece of the Silicon Valley

  3. Opalesque Exclusive: Ex-Citi trader launches 'sleep-at-night’ long/short equity fund[more]

    Benedicte Gravrand, Opalesque Geneva for New Managers: After working at Citi's proprietary trading desk, managing a large portfolio between 2008 and 2011, Joel S. Salomon founded SalauMor Management in New York

  4. …And Finally - Prison restaurant is the best in Cardiff[more]

    From Orange.co.uk: A restaurant at a prison staffed entirely by inmates has been ranked as the best in Cardiff by diners. The Clink Restaurant at HMP Cardiff - which is open to the public - has been ranked number one on TripAdvisor out of 946 eateries in the Welsh capital. Diners who pos

  5. Update: Prosecutors seek 12 years for hedge fund manager Francisco Illarramendi[more]

    Komfie Manalo, Opalesque Asia: Federal prosecutors have asked the court to sentence convicted hedge fund manager Francisco Illarramendi to 12 years imprisonment for running an elaborate Ponzi scheme that bilked investors hundreds of millions in dollars, including a Venezuelan pension fund, report