Talk:Hedge fund

I can't believe

I can't believe someone would take such a move. Do people ever learn. Anyway, it always form a good story once they get burnt. Quote "in financial markets, where hedge funds have been borrowing at lower short-term rates and lending out at higher long-term rates on the assumption that Alan Greenspan and the Federal Reserve have slain the inflation dragon and would do nothing precipitous to jeopardize their "carry trade." [1] — Preceding unsigned comment added by Wk muriithi (talk • contribs)

The View from the future

Am I the only one who thinks this line is at least odd (if not incorrect):

"At the beginning of 21st century it was regarded by some as a "fashionable" type of investing, since hedge funds saw large inflows of money during that time." Axamoto 14:28, 21 July 2005 (UTC)

It's a stupid POV line, see Wikipedia:Avoid weasel words. "regarded by some"? Oh really... who gives a shit?

Linking to External Hedge Fund Sites

Should we even have Hedge Funds links pointing to websites which by law cannot contain any information without protected with a password? Investors who want to access the information, generally have to be "Qualified Clients" (worth over 1.5million). IMO it's not worth the trouble pointing to the sites.

If the Hedge Fund is large enough to be worth it, then a wikipedia page should be created for the Hedge Fund

Or if it is widely known about rather than being obscure?

Hurdles/HWM

Hurdles and Highwater marks definitely need to be spelled out here (by someone with a better financial literacy than I).

Also, side pockets.

The article could be improved by this -- hedgefunddot.

Hedge Fund Managers

What is the point of the hedge fund managers section. There are over 8000 hedge funds, and thousands of managers manage them. What is the criterion to get on the list? Jim Cramer, for example, doesn't even manage a Hedge Fund any more? Awormus 21:49, 4 February 2006 (UTC)

I do agree - it is really a daunting task to decide. --Bhadani 16:42, 3 March 2006 (UTC)

Agreed - It has the potential of becoming a big can of political worms, with all HF managers listing themselves and deleting their competitors. --RanBato, 07:06 5 May 2006.

I disagree, a list (albeit incomplete) of hedge fund managers provides valuable and germane information to readers.--wescbell, 12:48 31 May, 2006.

List the top ones for each year only is the solution. Hedge Fund ranking for 2005. Who where the top Hedge Fund managers of 2005 [2]

Trade2tradewell 17:16, 27 January 2007 (UTC)

Macro Funds

I noticed that Macro Funds (such as Soros' itself) where not included as a Hedge Fund Class. Shoudn't they be included?

Good point. I just added that class, under the usual name "Global macro". Turning that red link blue will have to be a task for another day though. --Christofurio 02:13, 4 March 2006 (UTC)

Sentence with no ending

"While most of today's hedge funds still trade stocks both long and short, many do not trade stocks at all and the term hedge fund has come to mean a"

Why does this sentence simply have no ending?

This sort of stuff looks really bad..

Article lacks critical perspective, reads like industry handout

I think this article is problematic in several ways, and overall reads as if it were written by a hedge fund trade association.

For example, early in the article is a reference to a study of incentive fees that examined mutual funds,, not hedge funds, and went on to editorialize that larger hedge fund fees are good.

I have removed the above, erroneous reference and also added a section on criticism of hedge funds, which the article sorely needs. I hope others can expand on that section and fix this article generally.--Mantanmoreland 20:29, 19 May 2006 (UTC)

criticisms

Deleted the sentence: "Other criticism involves potential hazards posed to investors. These concerns relate to hedge fund insolvency as the result of: market setbacks, the negligence of management, or even, in some widely publicized instances, outright criminality." to the extent such criticisms exist they're not only uninformed, the miss the point that hedge funds are lightly regulated precisely because people with sufficient assets to invest in them are generally sophisticated enough (or have access to sophisticated advice) on those risks, and in any case market setbacks, management negligence and outright criminality are in no way specific to hedge funds. All financial investments, even putting money in a cheque account, involve all of these risks. These "hazards" are called "risks". There is no reward without risk. ElectricRay 22:40, 14 June 2006 (UTC)

Link not working

The link "How to Set Up Your Own Hedge Fund and Due Diligence, Disclosure and Fund Managers - by Hannah Terhune, JD LLM (Taxation, New York University)" seems not to be connecting to the server right now, does anyone else have this problem? I'm going to give it a few days then take it off. If someone has a reason not to do this, please let me know! 1:28 am CT June 19th 2006

SEC Add

I cant tell reading the section about govt regulation where the SEC presently stands.

As I understand it , the SEC lost a case litigating whether or not SEC rules were ok requiring hedge funds to be registered with the SEC ; AND , just yesterday, the SEC stated it would not appeal that federal court decision.

SO, the SEC does NOT require hedge funds presently to be registered and can NOT by that recent federal court case.

See

• SEC wont appeal federal court overturning SEC's hedge fund rules

,,,,bigwilly2hedge,,,,

Update, Hedge Fund Crashes section

see today NY Post http://www.nypost.com/business/hedge_funds_flameout_may_scuttle_abn_deal_business_zachery_kouwe.htm

see this weeks New York: Angelo Hagiligannis wipes out $180 million hedge fund and then disappears .... http://newyorkmetro.com/news/businessfinance/23171

Angelo is one of the 1000s of Hedge Fund managers with clown level experience having only 1 year experience as only a broker assistant at Merrill Lynch

Where were Hedge funds?

Where were hedge funds designed to make higher returns during the advance of the DJIA from 1,000 to 11,700 from about 1988 to 2000 ???

And where was your regular brokerage firm as Merrill , Goldman, Soly, Morgan Stanley, First Boston, Lehman --- none of them either hedge funds or major Wall Street firms made like anything during this most major rally in history... what they did make was pitling small when with levereage any of them - hedge funds or major firms - should have been making then and now 10 +++ billion per year in profits ... which one did ???

NOT A SINGLE FRKG ONE none of them... does this clue you in to how pitiful they ALL are ????

- and your point would be? ElectricRay 13:28, 4 December 2006 (UTC)

! markit pro

add transparency section

the special reason for SEC , regulator concern, would be the heavy "touting" by hedge fund managers of facts simply not only untrue but clearly fraud... as done by one of the largest funds out there, (over 10 billion, top 5 hedge fund) ,,,,eye witness-gintwillysr (< not touting , factual ?),,,,

Funds of Funds

The funds of funds listing has been removed several times, I am personally against needing to list the funds (especially since most of the external websites being linked to hold no information. However they have been removed several times for no apparant reason, so we should come to an agreement about their place on the page. Awormus 20:11, 4 September 2006 (UTC)

Limited Partnerships???

Ummmm...rubbish. Many US HFs are LLCs. Most overseas are LTDs. This is to say nothing of the abundance of SPCs. HedgeFundBob 13:16, 21 September 2006 (UTC)

- completely agree - have removed this reference from the introduction. ElectricRay 13:28, 4 December 2006 (UTC)

hedge fund

hi there would you tell me please, if hedge fund gaurantee an activity?

i will if (a) you sign your post and (b) your post makes grammatical sense. Right now, it doesn't. ElectricRay 13:28, 4 December 2006 (UTC)

News Articles?

Are newspaper articles properly included in these pages? They do not add anything to the content, and quickly become outdated. Shouldn't they be removed?

Error or otherwise unclear section

In the section "Equality long short", there's a paragraph about risk metrics (presently the one before the last). It reads "Net exposure is long exposure less short exposure and in our example above would be 100 - 50 = 50 USD or 50%.". Shouldn't it be "[...] 150 - 50 = 100 USD or 100%."?

LMB 14:02, 11 November 2006 (UTC)

Example on How Fees are Charged is Confusing

Misterwiki39393 02:39, 21 November 2006 (UTC)

I was very confused by what is written below about how fees are charged(copied from the article). Can somebody give an example with a real dollar amount? For example, suppose somebody invests $1000 and it goes up 20% in 1 year. How much is the management fee, and how much is the performance fee? You mention a 2 and 20. Is the 2% a percent of $1000, $1200, or some other number? And where does the 20% come in? Is that supposed to be 20% of 200, or does the 2% come off first?

"The typical hedge fund charges what is known in the industry as 2 and 20 by which is meant that management fees are 2% per annum and performance fees are 20% of whatever returns are generated. All these fees apply to gross asset values and gross performance."

"Assume that a hedge fund returns 15% in a year net of all fees. This means that the gross returns must add back the 2% management fee and adjust for the 20% share of gross returns that accrue to the hedge fund manager."

"Gross returns are therefore (15% + 2%) / (100% - 20%) = 21.25%. Total fees to the hedge fund manager are therefore 21.25% - 15.00% = 6.25% Net returns to the investor = 15% "

"many hedge funds do not trade stocks at all"

For some reason this was tagged with a label. Across the hedge fund space there are whole categories of fund managers which don't trade equities: credit funds, emerging market debt funds; Commodity Trading Advisers (aka Managed Futures); ABS funds... there is no need for a citation to back this statement any more than there would be to say "men and women compete in golf tournaments" - it's simply true. ElectricRay 12:58, 4 December 2006 (UTC)

Tidy Up Intro

I have tidied up the intro. ElectricRay 13:29, 4 December 2006 (UTC)

Mind if I take another shot? Servalo 22:02, 8 January 2007 (UTC)

Err, better not try any formating I guess. Servalo 22:04, 8 January 2007 (UTC)

Various changes, advice please

I've made several changes to introduction and FoFs. The changes are incomplete (eg unreferenced) and there are several other sections I plan to work on -- particularly performance fees, which for me are the key HF concept -- but I'll give it a rest for now as I've a rather shaky grasp of the wiki approach and advice would be welcome.

1) The article looks a bit long to me. Wouldn't it make more sense to have the strategies sections (eg L/S equity) just referencing the relevant pages rather than duplicating them?

2) The regulatory section is quite specialised, not key to the topic, and rapidly changing. Maybe better as a separate entity? (Page? Not sure this is the correct term)

3) The criticism is of mixed quality. "Questionable propriety" is specific but not very informative; "Go-anywhere approach is an invitation to mischief" is true (and charming) but not very specific; while the fees section is vital but at least in part would be better incorporated into the defining properties. Does the article need a criticism section if the other sections are balanced appropriately? Servalo 00:24, 9 January 2007 (UTC)

4) Added sections on fees and structure, with material from Origins and Criticism. Intention is to merge Flows and levels into Origins and put the comparison sections lower down, perhaps with the regulatory material.Servalo 17:55, 11 January 2007 (UTC)

Opening paragraph

In the opening paragraph the article says that hedge funds are "unlike mutual funds," but then in the second paragraph it says that an example of such retail funds "are mutual funds." Am I missing something, because this seems like an incontiunity. RENTASTRAWBERRY ^{FOR LET?} röck 01:24, 17 January 2007 (UTC)

But it says that hedge funds are precisely NOT retail funds. Typewritten 14:18, 22 January 2007 (UTC)

This is all a bit of a mess due to conflicting edits. US retail funds are called mutual funds. HFs are compared to both in different places; personally I'd prefer to standardise on "Retail Fund" (see US Bias below). Servalo 17:41, 26 January 2007 (UTC)

Hedge funds and accredited investors

In the "Comparison to U.S. mutual funds" section, I believe the following statement is incorrect:

"A hedge fund investor must be an accredited investor..."

I have just began studying hedge funds and noticed that while most hedge fund managers choose to go with accredited investors, this is not an absolute requirement, although it may be the norm. It seems to have something to do with disclosure requirements. The Capital Management Law Group states that "Offerings made to 'accredited investors' exclusively are exempt from disclosure requirements under Rule 506." It also states that "Of course, the hedge fund may wish to allow non-accredited investors into the fund, in which case it will not be exempt from disclosure requirements." Hedge Fund article by Capital Management Law Group Gaytan 06:59, 25 January 2007 (UTC)

Its more fundamentally incorrect than that: "accredited investor" is a legal term that only applies in the US (though similar concepts exist most places). My opinion is that restricted availability to investors is so common among HFs that it is a defining feature, but as with everything else in this field there are a few exceptions. For example in Japan there are a handful of retail funds with all the other properties of hedgefunds, and I'd call them hedgefunds. Just as there are a small percentage world wide that don't charge performance fees. Servalo 17:41, 26 January 2007 (UTC)

US Bias

A lot of the material on this page is written from a US perspective. We should not assume that the SEC and NASD are relevant regulators or that Mutual Funds are the name for retail funds. Both are true for the US but not for the rest of the world, and it would be better to use generic terms such as "Regulator" and "Retail Fund", particularly in the introduction. Perhaps also better to move the country-specific stuff to separate pages? Servalo 17:41, 26 January 2007 (UTC)

Perhaps we need to have a hedge fund (US) page that is separate? Or parse out US vs. foreign? Or do a compare/contrast section? I'm amenable to any ideas. Netsumdisc 19:24, 26 January 2007 (UTC)

US is such an important part of the field that it should have discussion, its mainly a question of where. I think the article is a bit long and "Regulatory developments" sections is pretty technical for the main article, so how about a separate page "Hedgefund regulation" to hold all the US and UK stuff? It could also hold the US-specific material from the "comparison to" sections, I should be able to add stubs for Dublin, Luxembourg and Switzerland.

Not sure if thats the best approach, but I'd definitely keep country-specific stuff out of the intro. Servalo 11:08, 29 January 2007 (UTC)

OK, moved regulation into a single section for now. Could maybe shift it into a separate page. Haven't yet removed US stuff from intro because the regulation section is too legalistic to replace it. I'd like to write "why do they exist", "what do they do", "what goes wrong" and "why everyone hates them" rather than referencing 3(c)7, but that will have to wait for another day 8-) Servalo 19:34, 29 January 2007 (UTC)

It needs to be noted that some funds are regulated by the CFTC if they trade futures in volume.--Samiharris 16:06, 1 February 2007 (UTC)