janacek remodeling prefab sunroom addition lakewood ikea kitchen remodel island lake adding onto a ranch glenview this old house bathroom remodel highland park .. Chicago Drug testing

The Problem With Hedge Funds

Are hedge funds a suitable investment for you? Hedge funds are an appropriate investment for qualified purchasers with a net worth above one million dollars and an annual income exceeding two hundred and fifty thousand dollars. Purchasers are often required to sign an acknowledgement confirming their qualifications to invest in hedge funds. However, just because one is qualified to invest in a hedge fund doesn't necessarily mean they should do so. There is a major problem with this type of investment. Oftentimes, the risk associated with the fund is misrepresented, leading to investors being misguided into skewing their qualifications.

The term "hedge fund" is a generic term used to describe many unique investments. Put simply, the phrase is derived from the purpose ? hedging the risk of investing. Hedge funds provide lower long-term returns in exchange for less volatility. The form of investment is not new, but their popularity certainly is. The newfound popularity of hedge funds has left many investors wondering what they are all about.

To shed a little light on a decidedly illusive investment tool, a quick run down is necessary. A hedge fund is typically a privately organized pooled investment fund, predominately invested in publicly traded securities. They are normally created as limited partnerships, consisting of one general partner and up to one hundred limited partners. The general partner usually receives a management fee and 10-20% of the profits from the fund. The success or failure of a hedge fund is often dependant on the competency of the fund manager, since they are more aggressively managed and traded than traditional mutual funds.

It should be noted that hedge funds have a higher failure rate than traditional funds. Numerous hedge funds fail by the second or third year of operation. Also, hedge funds are less transparent than traditional funds because some hedge fund managers do not reveal the securities they hold, or the extent to which they are leveraged. Hedge funds may have a higher turnover rate and be less tax efficient than traditional funds.

Along with the aforementioned downfalls associated with hedge funds, several more negatives should be noted. The management and performance incentive fees charged by the hedge fund manager, together with the trading costs and administrative fees can quickly add up, making B share mutual funds seem like a bargain. As stated earlier, only "qualified" purchasers are eligible to invest in hedge funds, leaving many would-be investors out in the cold. And liquidity, if available, is limited to quarterly release, and even then, investors are left at the mercy of the hedge fund manager.

The bottom line is, when dealing with hedge funds, get educated about your investment before jumping in. Discuss the option, both pros and cons, with your dealer, and know what you are getting into.

For more information on hedge funds and hedge fund attorneys, please click here.

In The News:

Investment Capital Gains

Have you bought any mutual funds this year or late... Read More

Investing in the Stock Market

From the book 'The Stockopoly Plan' by the author Charles... Read More

Prospering with Mutual Funds: How Anyone can ?Afford? an Investment Advisor

Recently I was invited to appear on a live CNNfn... Read More

How To Pick A Mutual Fund

Mutual funds by definition are a mixed bag of stocks,... Read More

Mousetrap

The spring-loaded rat catcher is the ultimate low-tech device invented... Read More

Keep Your Profits

It looks like we have now entered a new bull... Read More

Precision Money Management

This article describes the model of a natural relationship between... Read More

Getting Even

I know there are a lot of you out there... Read More

Stock and Fund Dividends

When is a dividend not a dividend?The latest thing "conservative"... Read More

Stock Trading Secrets?

How often have you come across an advertisement or e-mail... Read More

Stock Market Insanity

Let's first define insanity. It is doing the same thing... Read More

Lies, Damn Lies and Mutual Fund Returns

How many times has this happened to you? You're at... Read More

Market Timing

Every broker and financial planner will tell you that you... Read More

Market Psychology

Today we are inundated with tons of information about the... Read More

A Penny for Your Stocks

According to Investopedia Inc. the penny stock market has seen... Read More

Understanding Stock Market Indexes

A stock market index is a statistical measure of changes... Read More

Alfred E. Newman

What! Me worry?Many of you remember the cover of MAD... Read More

Trading vs Investing

I often hear from people, "I don't trade. I invest.... Read More

Buy and Hold: How to Perpetuate Your Investment Losses

A recent cartoon in my daily newspaper showed two guys... Read More

Exchange Traded Funds Primer

Exchange Traded Funds (ETFs) are a group of passive index... Read More

3 Components Needed for Beating the Market

Time to look back2004 is over, now we are in... Read More

Understanding the Bulls and the Bears

If you've ever flipped on the television to CNN Financial... Read More

Swing Trading Strategies

Using Swing Trading Strategies and Technical Analysis when Trading Stocks... Read More

Duct Tape

Did you run out to buy that duct tape yet?... Read More

Trading Tips No 5: Stock Trading Curve Drawdown and Commitment

All stock trading and investing methods must deal with the... Read More

cheap led lights lightbulbsusa Pete's produce ..
cheap led lights lightbulbsusa Pete's produce ..