Top Answer
User Avatar
Wiki User
Answered 2008-03-09 02:57:41

Similar stock or commodity with oposing expected valuation. It takes a team, a marketing plan, seed capital, and operating capital. It takes a lot of capital and most hedge funds never grow into long-term viable businesses.

Personally I believe that there will be hundreds of new hedge funds started every year for the next 7-10 years. Institutions are by and large increasing their allocations to these products and the surveys of the ultra-wealthy and high net worth financial advisers show a strong sense of confidence in increasingly using alternative assets within their portfolios. Soon I will start writing more often on exactly what financial advisers, family offices and institutions look for in hedge funds because if you work in the industry you will probably be interested in working for a hedge fund that is positioned for growth and if you invest in them I hope that you will contribute to the ongoing conversation here within this hedge fund blog and hopefully I will uncover at least one useful resource for you or your clients.

User Avatar

Your Answer


Still Have Questions?

Related Questions

How do mutual fund and hedge fund investments differ?

Mutual funds are only different from hedge funds in that they are purchased completely up front whereas hedge funds are paid for over time.

How do you set up a hedge fund?

Hedge funds are set up to invest large amounts of money from big investors. They have no purpose in personal finance.

How do you start your own hedge fund?

Assuming you don't already have connection to seed capital, according to many of the wisest, and most successful hedge fund managers in the world, the fastest, and most realistic way, is to first start your own business, make enough seed money (25M) minimum to start your on proprietary fund (many legal ways to easily create the actual hedge fund) implement your particular investment objective (macro, arbitrage, long/short, etc.), string together a 5 year market beating track history, and the money will find you. Pick up a copy of Hedge Hogging by Barton Biggs and Inside the House of Money by Steven Drobny for recent accounts of the inside goings on and the challenges of raising money without "connections" Hedge Fund Seed Capital Hedge Fund Seed capital is the money a hedge fund tries to raise to launch or within it's first year of operating to try to "get it off the ground" and hopefully raise enough assets to appear respectable to initial investors and provide initial momentum towards breaking even as a business. Hedge fund seed capital is in high demand, there are literally hundreds of investment groups looking for it right now and only three or four handfuls will receive any significant amount of it. Some hedge funds are seeded with as little as $500,00 while others receive up to $350M. From my experience I would guess that 68% of first year hedge fund seed capital levels range from $3M to $25M. * Hedge Fund Seed Capital Source #1: High Net Worth individuals (accredited investors) who are familiar with your trading skills, past portfolio management experience, or clearly understand your competitive advantage in the marketplace.* Hedge Fund Seed Capital Source #2: Family & Friends who are accredited investors.* Hedge Fund Seed Capital Source #3: Private Equity Firms. Many private equity funds have jumped into the space of seeding hedge funds and many will in turn work on raising assets for your fund once it will benefit both your fund and themselves. * Hedge Fund Seed Capital Source #3: Hedge Funds. Some hedge funds have huge amounts of free cash flow and are looking for ways to re-invest it within strategies they understand and do not directly compete with products that they plan to create on their own.

What is crystallized incentive fee on hedge fund?

Crystallized incentive fee on a hedge fund means that the incentive fee is frozen for a period of time. Instead of the fee going up or down, it crystallizes or freezes at a certain rate.

What is the difference between hedging and hedge fund?

Hedging is a general concept also which is made popular by the term "Hedging your bets". This is often done by betting on 2 opposing situations thereby turning a profit regardless of the outcome. In finance a "hedge" is often accomplished by both shorting a stock and buying options to hedge yourself in the chance that the stock goes up. A hedge fund is an unregulated investment fund that are popular amongst high-net worth and institutional investors. Hedge funds are different from mutual funds because they are not regulated, the hedge fund manager has the ability to buy and sell all types of assets, betting on rise and falls of securities.

Is hedge fund investing a good method for cash flow improvement?

Hedge Fund Investing can be a good method for cash flow inprovemt. At least it offer a consistency for the unsure mind. For people that have not made up their minds on how to invest HFI will help to guide you on your path.

Who is the Asian lady who sits nexts to Jack Nicholson at Lakers games?

Her name is Weton Hu. She made millions with a start up in the ninties and now runs a hedge fund based in Ontario.

What is the meaning of hedge fund and why they are called hedge funds?

The name of hedge fund originally comes from the fact that hedge funds were able to buy stocks long and sell stocks short, therefore hedging the market risk. So if the market went up or down, the fact that it had long and short positions enabled them to potentially have positive returns regardless of market action. Over time, hedge funds have evolved and they are involved in a myriad of investment strategies and the long-short funds are only a subset of all hedge funds, so that currently the name is a misnomer.

Ideas to improve hedge fund accounting process?

You can use online solution which is friendly, can be set up in minutes and less expensive than the solutions installed on your servers. And no need in solution administration at all...

Finding Hedge Fund Jobs?

Hedge fund jobs are some of the more stressful-- yet more prized-- jobs in the financial sector. With the diversity of investments that a hedge fund can be involved with at any given time, it's important for hedge fund managers to hire on people that have a diverse background in finance. It wouldn't be very helpful for a hedge fund manager to hire on a bunch of people that specialize in specific aspects of finance, so you need to make sure that you are not that kind of specialist when you're applying for hedge fund jobs. Finding these hedge fund jobs can be very difficult if you don't know where to look. With the recent stream of new regulations that have been coming down around the financial industry, some hedge funds are being forced to shore up their workforce and competition for these limited jobs. It's a feeling that is prevalent throughout the entire financial industry: it's time to work smarter. Public mistrust in financial institutions has caused a growing ring of regulation to be brought down on the industry, and this means that hedge funds need to be much more careful about the people that they hire now. While the job market in is competitive, there is still more than enough room for people that have the right mixture of skills and ambition. The trick is to keep looking over employment websites and to keep up with your old professors in college. Employment websites can make your search for hedge fund jobs much faster since the jobs will be put into an accessible form that you can peruse. Keeping in contact with your old professors is also very important since they will often have contacts in the financial industry that will be of use to you. Also, professors are great to have in your corner when you need to get some letters of recommendation. There is no doubt that the financial industry is a competitive one. While the regulations make it more competitive now, there was never a time when it wasn't exceptionally competitive in the financial industry. It's important to keep your competitive spirit alive when hunting for hedge fund jobs.

Where could one find advice about setting up a Forex fund?

If an individual is looking for advice on how to set up a Forex Fund, this is easy to do. For instance, many stock-broker websites have information and tools on how to set up this type of fund. Additionally, a person may want to consult with a broker who specializes in Hedge Funds or stocks and bonds for advice on setting up one of these funds.

In Over the Hedge the animals find the hedge after waking up from what?


What are some careers that have a salary of 200000 dollars and up?

Corporate Lawyer for one of the top firms.Surgeon.Medical Device Sales.High Finance- Hedge fund, investment banking, private equity.

Why do you need an emergency fund before you start investing?

because if you go over your budget you will need a back up supply of money

You have not sufficient fund to stsrt a business but with hard work you will be serve any job?

If you work hard, you can save up enough money to start up a business of your own.

How can you find venture capital jobs?

Venture capital jobs can be very difficult to get into. More often than not, most partners come from being a successful entrepreneur. The only other way to become a partner in venture capital is to work your way up through the firm. Graduating from a top school sure helps! You can also start by getting a job at a hedge fund or bank.

Hedge Funds?

Hedge funds are sexy investment vehicles. They are to boring mutual funds what a Lamborghini is to a Honda. (And for most people there is nothing at all wrong with a Honda.) Many people buy Lamborghinis and engage in hedge fund investing because they can. There are bragging rights that come along with having a hedge fund as part of your investment portfolio, but mostly that’s due to the exclusive nature of them, not the fact that they perform any better or worse than the average mutual fund. What exactly constitutes a hedge fund? Usually it's a fund that uses a secret proprietary methodology for capturing gains. The methodology may or may not work as advertised. Usually the investment methods of hedge funds employ leverage, investing in commodities or complex derivatives, and/or highly sophisticated (and completely automated) quantitative investment models. All of these things add to the risk of investing in a hedge fund. One example of the increased risk is the employment of a leveraged strategy known as a long-short strategy. These strategies, known by a ratio and denoted by using numbers such as 130/30, work by allowing the fund manager to buy long positions of up to 100% of the funds value, and then to sell short positions of (in the case of the 130/30 fund) 30% of the value of the portfolio. With the money earned from selling the short positions the fund manager buys more long positions, essentially putting much more money to work. It’s a brilliant strategy when it works to your advantage; it’s brilliantly tragic when it does not. The effect of the leverage amplifies gains, it’s true; but it can also amplify losses and with the short positions, investors are open to a theoretical infinite risk of loss. Because of the increased risk the average investor cannot put their money into a hedge fund; one has to be what is called an accredited investor. In order to qualify as an accredited investor you have to be an individual who meets one of the following two criteria: 1. have a net worth of $1 million 2. have a minimum annual income of $200,000 in each of the last 2 years and a reasonable expectation of reaching the same in the current year These limitations are known as the private placement rules as set forth in Regulation D of the Securities Act of 1933. My advice is to stick to the boring Honda. It might not get you where you’re going as fast but in the event of a wreck, you’ll be happy you were going a safer speed.

What is the meaning of hedge fund and why they are called hedge funds what was their role in us sub prime mortgage crises?

A hedge fund, as the name suggests, is a fund that has "hedges"--or preventative measures--in place so that the fund will (theoretically) do well in a bull or bear market. That might mean that hedge fund managers buy stocks for the long haul, while also shorting stocks or buying options in case stock prices go down, for example. They might also make big bets on certain sectors (such as natural resources or the mortgage market) that can earn huge returns if they're right--or cause the fund to go bust if they're wrong (as well as shaking up Wall Street in general. So much for the "hedges.") They played a role in the subprime mortgage crisis because they purchased subprime mortgages (repackaged as bonds) to such a degree that banks, mortgage brokers, etc. lost sight of their primarily responsibility (i.e., loaning money only to people who could afford to buy a house) because the banks didn't have to keep the loans on the books: they essentially sold them to hedge funds and other investors. So, if one side--the hedge funds--is willing to buy risky subprime loans (in the hopes of big profits), the other side--the banks, etc.--are going to be far more willing to make those loans (in the hopes of big profits). Then, when the borrowers (the home buyers) have trouble paying their mortgages, the hedge funds are going to be hit...but only if they haven't already sold those loans-repackaged-as-bonds to some other sucker. In short, the hedge funds helped create the atmosphere of easy credit for people who couldn't afford home loans. Moreover, since hedge funds also have a way to make money when the market goes down (because they short stocks, etc.), they also can profit by hyping doom and gloom. Thus, even though the subprime mortgage market is a relatively small part of the U.S. economy, you'd never guess it from all the press it's getting now. "

How do you remove a privet hedge?

you must pull them up by the roots with alot of force.

What do you fund carbohydrates?

up your bum

What is a hedge hog needle?

A hedge hog has needles on its back. They are actually hollow hairs similar to a porcupine, except that hedge hogs won't stick you with them like a porcupine can. The quills are prickly when you hold a hedge hog in your hand, but they aren't sharp. There stomachs are covered in soft light-colored fur and they curl up into a ball to protect themselves.

Which government fund was set up in the wake of the Chinese aggression in 1962?

the national defence fund

What is the meaning of hedge fund and how they are worked in bulls and bare market?

a hedge fund is an investment fund where the fund manager will use a derivative such as a futures contract to lock in the value of it's securities. this is primarily used for funds valued in foreign currency, the fund manager will hedge the fund back to the currency of it country of origin. For example Canadian fund manager A has 1000 shares of American company ABC currently trading at $10 dollars a share for his US Equity fund. Assuming that the value of the shares didn't change, (unlikely) the primary concern will be exchange rate to convert Cdn dollars to US dollars and back again. The fund manager can make a contract with another investor (fund manager B) to exchange the currency at a given price. So in our example will say the 2 currencies are trading at par but fund manager A think the the Cdn dollar will drop in price compared to the US so he makes a contract with manager B to exchange $10,000 (1000 shares x $10 a share) at $0.95 meaning he would end up with $9500. if the value of the Cdn dollar dropped below $0.95 US (as in a cdn Bear Market) He is safe because he is guaranteed the $0.95. If however the cdn dollar were to shoot up to say $1.10 US, manager has lost out on the growth because he is obligated to sell his money at the $0.95. hope that makes sense.AnswerHedge funds are mutual funds for the rich. There are two differences between hedges and mutuals: the investors allowed to participate, and the kinds of investments they can hold. Mutual funds can be open to anyone who has enough money to buy shares, but in exchange they're only allowed to hold long positions on stocks.Hedge funds are allowed to accept a limited pool of "accredited investors," who are people or trust funds who have millions of dollars. IIRC about seven percent of all Americans qualify to play in the hedge market. In exchange for dealing only with people who can afford to lose their ass over a hedge investment gone bad, these funds can buy into basically anything they want, including short positions on stocks, selling naked calls, junk could PROBABLY establish a hedge fund to make massive bets on horse races.The "hedging" part comes in because the paper the funds buy is so speculative. My least favorite investment, as you guys may be aware, is the naked call. It is insanely risky--let's say I am shorting Acme shares. If it's at $10 and I think Acme's going to be at $5 next month because the Coyote is suing them, I could sell a naked call for 100,000 of Acme at $6 with a premium of $3. If I'm right, I make $300,000 by keeping the premium. If I'm wrong and the stock goes to $25 because the Coyote lost, I am supremely screwed. I would therefore hedge this by purchasing a naked call on 50,000 shares. This way, I'm only half as screwed if I blow the call.

Disadvantages of having hedges?

It can cost Farmers money and can eat up all his profit. Also cutting hedges can take hours and it needs to be done by a professional hedge cutter

How long does Fentanyl take to start working?

The first dosage of Fentanyl can take up to 24 hours before the effects are felt. After the initial dose, it can take up to 12 hours to start working.