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 #REDIRECT 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?

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..

Just do it! — Subsolar 00:59, 21 February 2007 (UTC)

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)

Completely agree. There tends to be a bit too much citation tagging on Wiki generally simply because the taggers aren't familiar with the field. Understandable, but there is no need for a citation here. Using the knowledge base of the general public is what Wiki is all about, surely? 80.229.27.145 09:18, 14 April 2007 (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)

There is a distinction between the approach that hedge funds take to regulation (i.e. avoiding it), which is common across all jurisdictions, and the specific consequences of that approach in each jurisdiction. The general sections should set out the general principles, and the details should be set out in the regulatory section. Having US-specific content in the general sections is both confusing and inaccurate.

There is also some distinction between the regulation that applies to an investment management company carrying on investment activities in a jurisdicton, and the regulation that applies to a fund when attracting investors in certain jurisdictions. The consequence is that lawyers setting up UK-managed funds spend a lot of time considering SEC regulations (and I assume the reverse is true of US-managed funds seeking overseas investors). So it is not simply a question of saying "US funds need to think about the SEC etc, UK funds need to think about the FSA" and so on. 86.135.93.25 21:16, 25 March 2007 (UTC)

"There is a distinction between the approach that hedge funds take to regulation (i.e. avoiding it), which is common across all jurisdictions..." 8-)

The US is important because their rules are uniquely extra-territorial. All other regulators, AFAIK, are content with an "Offshore = dangerous" warning. Servalo 20:11, 30 April 2007 (UTC)

Distinction between hedge funds and hedge fund management company

The IPO of Fortress calls attention to the article being weak in making the distinction between hedge funds and hedge fund management companies.--Gkklein 03:08, 11 February 2007 (UTC)

That is a very very good point. One management company can have several or many hedge funds. Merrill Lynch and the large wire houses have many funds, whereas smaller hedge funds otherwise. Many have domestic and overseas funds in one management company. I added a sentence under "legal structure," but of course that can be expanded.--Samiharris 17:10, 11 February 2007 (UTC)

Link to Spanish language website

A link to a Spanish language website, http://www.fondosdeinversionlibre.com, was placed in the links section of this article recently. I do not speak Spanish and I don't think it is correct to use a website in the English Wikipedia. Unless someone can provide a reason to keep this link, I will remove it.--Samiharris 15:51, 20 February 2007 (UTC)

I say delete. Subsolar 00:51, 21 February 2007 (UTC)

How does it really ensure security??

Hi..Can somebody tell me how this hedge funds bring security..I am not really clear about the basics

If you want you can mail your reply to deba_842003@yahoo.co.in. —The preceding unsigned comment was added by 220.226.10.73 (talk) 09:14, 6 March 2007 (UTC).

You may want to try one of the many good websites devoted to hedge funds, such as are listed in the external links. Good luck.--Samiharris 00:38, 7 March 2007 (UTC)

Hedge fund index section

I have a problem with the section entitled "Hedge Fund Indexes." This section does not cite its sources and contains statements concerning several proprietary hedge fund indices that are dubious. You have, for instance, the old bugaboo about survivorship bias whereas I do believe this issue was resolved in all current indexes. This section needs work and sourcing.--Samiharris 15:00, 12 March 2007 (UTC)

Personal opinion is that it has been addressed but not resolved. The incentives are too high. I keep meeting "new" funds with 2y track records, and while I do backfill and survivorship biasses are alive and well. Servalo 20:15, 30 April 2007 (UTC)

I reckon the whole section looks a bit like an advert, and is probably too long for this article in any case... Art Markham 16:20, 17 October 2007 (UTC)

Terminology

The terms "alpha", "pure alpha", "static beta", and "alternative beta" are used in the article but never defined, nor is there a link to an explanation. I see that there is an alternative beta article that could be linked to, but that article does not shed much light on the topic for me. --Honestshrubber 21:24, 12 March 2007 (UTC)

The article for alpha is Alpha (investment). You are right. This article has a number of problems and one of them is failure to define terms or link to term definitions. That can and should be corrected.

I added an internal link to Alpha. In browsing through this article, I agree that there is far too much jargon and far too many technical and unexplained concepts.--Samiharris 23:40, 12 March 2007 (UTC)

An article on such an intensely commercial field is always going to be difficult to edit as most of the best-informed contributors have some axe to grind. Defining all terms would make the article unwieldy, there are so many. Removing jargon is tough to do in a neutral way, much of the jargon is important to someone. US bias is deeply ingrained. Ho hum, keep up the good work 8-) Servalo 08:30, 4 April 2007 (UTC)

There are worse. One on Short and distort extracts the most mileage from a neologism. Once I started an article on Jack Sandner, one of the leading figures in futures trading in the last half century, and was told he might not be "notable." Finance article in general are a mess.--Samiharris 18:27, 11 April 2007 (UTC)

Mutual Fund and Hedge Fund

A little bit confusion about captioned two funds

Is the Hedge Fund kind of Mutual Fund, but its not subject to any regulation by SEC.

Or they are tow different investment funds

thx —The preceding unsigned comment was added by A2046xu (talk • contribs) 14:17, 26 March 2007 (UTC).

The Hedge Funds are different from the Mutual Funds. The regulations that apply to Mutual Funds (U.S. Investment Company Act of 1940) do not apply to Hedge Funds. Put differently, when a Hedge Fund is formed, the lawyers carefully scrutinize the documents to make absolutely sure that the fund will not accidentally come under regulation as a Mutual Fund. They are legally two different animals. (Like married persons versus single persons, or like U.S. citizens versus non U.S. citizens). The precise criteria for exemption from the Investment Company Act are specified in the Act itself. Encyclops 02:45, 1 April 2007 (UTC)

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?

(Please sign your posts)

I agree. In particular these links are often added by anonymous or new users, and I suspect they may be more interested in promoting the funds than in improving the article. So I'd like to propose the rule: *no* direct external links from this page, just link to notable funds within WP. Subsolar 08:02, 11 April 2007 (UTC)

Here is my interpretation of some criteria from WP:External Links for the links to the sites of particular hedge funds:

3. Links mainly intended to promote a web site -- seems to be the main motivation for adding direct links

4. Links to sites that primarily exist to sell products or services -- true for most fund sites

6. Links to sites that require payment or registration to view the relevant content -- true for many sites

7. Sites that are inaccessible to a substantial number of users -- this is true for many sites where you must be either a resident of a particular country, or have substantial liquid assets to view most of the content.

So I am now going to remove these links, and I would ask people to comment here if they feel any additions are justified.

I think it's appropriate for Notable funds to have their own entry and for that entry to link to their home page.— Preceding unsigned comment added by Subsolar (talk • contribs)

I agree with you 100 pct. There are far too many links that are little more than spams. Please remove, and I will too.--Samiharris 19:05, 22 April 2007 (UTC)

I'm in favour. There is no real need for a "notable hedgefunds" or "top earners" sections -- no-one who comes here to learn about HFs actually needs these links. There is something of a grey area around the indices, magazines and academic sites like Edhec and AIMA, but the page won't ever read like more than an ad unless we chop out of pages of crud... oops, hadn't noticed that they had already gone!

I'd suggest removing "Top 25 funds of hedge funds by assets" as well. Servalo 20:47, 30 April 2007 (UTC)

"Hedge funds in..."

It'd be really useful to understand what a hedge fund is in certain contexts. For example, I arrived at this article because I don't understand what a hedge fund is in the context of political campaigning, what some of the criticisms are, etc.

I would go wild over having sections like that, including "common criticisms" and other subsections of the contexts I mention above. Ironiridis 01:21, 27 April 2007 (UTC)

Great objectives, but hard to meet. There are no accepted definitions, so anything you say has exceptions. Two general guides:

1) Assume any reference to Hedgefunds is a) hostile b) pejorative c) envious d) all of the above.

2) One defn I liked was "Hedgefunds are ultracapitalists". This encapsulates a lot of the politics and economics. Servalo 20:42, 30 April 2007 (UTC)

Hedge Fund Replication

There is now some research about passive replication of hedge funds which I think that should be included in this article. There are basically two approaches: (1) Synthetic funds : Kat and Palaro's approach ( http://www.fundcreator.com ) (2) Factor models: Goldman Sachs ART, Merril Lynch Factor Index and AlphaSwiss Alternative Beta

There is some discussion about these models here: http://allaboutalpha.com/blog/category/hedge-fund-replication/ —The preceding unsigned comment was added by 86.135.124.124 (talk) 20:10, 7 May 2007 (UTC).

It is an area of research. Personally I think its a bit technical for the main HF article, its hard enough to write well on what HF are without introducing approximants, extracts, synthetics and their various problems. Perhaps a separate page? Servalo 21:29, 7 May 2007 (UTC)

US centric

This article is far to US centric. US specific parts should be extracted to a separate page

In an ideal world I'd agree, but a set of internationalising edits ("SEC" => "regulator" etc) were reverted very quickly. I'd guess most editors are American. Perhaps a pragmatic approach is to insert "in the US" for the specific stuff? Servalo 20:35, 17 May 2007 (UTC)

Hi, I am new contributor to Wikipedia. I am a Hedge Fund advisor, and I can share 1-2 paragraphs of information and trends on Hedge Funds outside US, especially London which is a big hub. Will that be helpful for this page? Let me know. Thanks. (AVSB (talk) 11:23, 19 November 2007 (UTC))

Recent events section needed

Hedge funds are in the news almost daily so some kind of "recent events" or similar section would be very useful.--Samiharris 15:33, 5 July 2007 (UTC)

Category:Hedge funds

I've just been looking through this category, and it seems to be a bit of a magnet for vanity articles. Perhaps people with more knowledge that I can have a look through at prod or AFD any non-notable companies? For example, I see no assertion of notability in Old Hill Partners Inc., Pacific Alternative Asset Management Company, or Medallion Fund (unlike Amaranth Advisors which clearly does assert notability, for example), but could an expert have a check? Cheers, DWaterson 14:34, 24 August 2007 (UTC)

Introductory paragraph

I think that the introductory paragraph could be made more useful. It should be a broad desciption of what hedge funds are about, that can stand on its own if necessary. I don't think that it quite does at the moment. They're difficult things to define, but I thought I would make a start at an alternative - please make comments/suggestions, particularly in respect of whether this description is also accurate for US hedge funds:

"A hedge fund is an investment fund structured to avoid direct regulation and taxation in major countries and which typically charges a performance fee. Being unregulated, a hedge fund is able to make greater use of derivatives, leverage and investment strategies such as short selling, and investing in a hedge fund is therefore thought to carry more risk than investing in a regulated fund. The assets of a hedge fund will usually be managed by a regulated investment management firm based in a major country."

Art Markham 15:13, 21 September 2007 (UTC)

"Unregulated" is a controversial way of referring to hedge funds. They are largely unregulated, but there are some regulatory requirements. Perhaps some other terminology could be used, and the comparison point in the paragraph could be to mutual funds. Not every hedge fund is managed by a regulated manager. Many are not. --Samiharris 03:07, 27 September 2007 (UTC)

I wouldn't say controversial, but perhaps a bending of the truth for the purposes of brevity, as all funds that I have dealt with (as a trainee funds lawyer) have been Cayman-incorporated companies that are unregulated in major countries, certainly in direct terms. Are US LP funds regulated in the US in any way? If we say "largely unregulated", does that suffice for the opening paragraph? I'm happy with "mutual fund", though the article here deals with US mutual funds, rather than the generic term, and the generic article is broad enough for hedge funds...

Regarding the investment manager - I am aware some are not, but I struggle to recall any by name - I assume all US-based fund managers are regulated? I'm happy with "usually" in that context, unless someone has the stats to show otherwise. This is just a summary of generalities, after all.Art Markham 19:52, 27 September 2007 (UTC)

Art, Polishing up the introductory para is a great idea, particularly on a sprawling and complex page like this, and I've no real problems with your proposal. Personally I would perhaps emphasise perf fees more -- they are the closest to a defining characteristic that I can see --and I'd also suggest that the greater risk is real rather than just perceived!

Samharris, I think "Unregulated" would do for the introductory para, which has to be concise. Servalo 07:49, 9 October 2007 (UTC)

There's no need to oversimplify. As it reads now is accurate. One could say "largely unregulated" if one wanted to do so.--Samiharris 19:11, 9 October 2007 (UTC)

Well, I've changed the whole introductory section. I think it is now all sufficiently conceptual and generic and covers all the key points without being country-specific, but it's by no means definitive so feel free to amend... Art Markham 16:41, 17 October 2007 (UTC)

Gross Asset Value

Can you pls tell me - When are the Gross Asset Values calculated or published ( made public ) ?

As in case of Mutual funds we get a daily updates on chaging NAVs, but for Hedge funds what is the time in a year when they report their gross performance.

Or putting it simply what time during the year a typical Hedge Fund will charge its Management & performance Fee. —Preceding unsigned comment added by 38.99.205.174 (talk) 16:21, 17 October 2007 (UTC)

I've never heard the term "gross asset value" used for a hedge fund (which is by no means to say that it isn't used...). Typically a hedge fund will pay its performance and management fees annually, quite often for the year ending 31 December. It will be based on the NAV at that time (or in the case of the performance fee, the increase since the previous 31 December). However, the NAV will usually be published monthly, when investors can also subscribe and redeem their investment. But this is only what is typical in my experience, and it all depends on the fund in question. Art Markham 16:39, 17 October 2007 (UTC)

Fees are usually accrued monthly, so the published NAVs are always "Net of fees". The date when the performance fee is paid usually makes little difference. Performance gross of fees is not usually stated, so if you want to work it out you would need to read the fund documents to find out the details of the fees and then add them back to the NAVs. Servalo 11:51, 2 November 2007 (UTC)

Organisational structure

I was wondering whether it might be worth having a small section on the organisational structure of the hedge fund's service providers. It might be getting a bit too "nuts and bolts", but let me know what you think. This is quite a rough draft:

Organisational structure

As a hedge fund has no employees or assets (other than its portfolio and an amount of cash), all of its functions are performed by service providers. The primary service providers are as follows:

Investment manager – the investment manager manages the investment of the fund's assets.

Distributor - the distributor is responsible for marketing the fund to potential investors. Frequently the distributor is also the investment manager.

Prime broker – prime brokerage services include lending money, acting as counterparty to derivative contracts, lending securities for the purpose of short selling, trade execution, clearing and settlement. Prime brokers are typically large investment banks.

Custodian – a custodian holds the legal title of the fund’s assets on behalf of the fund. The custodian is often also the prime broker (or its affiliate), and may control the flow of capital in order to meet the prime broker’s margin calls.

Administrator – the administrator typically deals with the issue and redemption of interests and shares, as well as calculating the net asset value of the fund. In some funds, particularly in the US some of these functions are performed by the investment manager, a practice that gives rise to a potential conflict of interest inherent in having the investment manager both determine the NAV and benefit from its increase through performance fees.

Art Markham 18:40, 17 October 2007 (UTC)

Too many external links?

Do we really need eleven links under "Industry News"? That seems somewhat excessive, akin to linking to every single UK national newspaper in an article about a British event. WP:EL says that "[External links] should be kept to a minimum. A lack of external links, or a small number of external links is not a reason to add external links." Eleven seems much more than "a minimum". 86.136.251.18 14:32, 20 October 2007 (UTC)

I would certainly not object to you removing less important links. I haven't looked at them myself, so don't know which are useful. On principle, I would prefer to see up-to-date objective data stay and to see opinion to go, except perhaps if there are two or three major competing hedge fund news sources selected. Art Markham 13:06, 23 October 2007 (UTC)

I think the IP is making a good point. There are far too many links and the notable hedge fund companies smacks of OR.--Samiharris 14:45, 24 October 2007 (UTC)

Word "host" in the intro"

Small point, but seeing as I made a direct revert I thought I would explain. Someone amended the first sentence to read "A hedge fund is an investment fund structured to avoid direct regulation and taxation in major host countries". I think that "host" is incorrect - the fund is structured to avoid regulation anywhere where there is heavy regulation. If the fund is a Cayman company, it is structured that way in order to avoid regulation in the USA, Europe and wherever, not specifically to avoid regulation in the Cayman islands. I think "host" maybe only makes any sense if the fund is a US LP(?). Art Markham 13:14, 23 October 2007 (UTC)

Time to restructure?

This is a big article, containing several different types of material. I wonder if it would help to break it down into several pages, with Hedgefunds linking to pages that focussed on (say) Trading Strategies; Performance Fees; Regulation and Domicile; Reputation; and Notable Hedgefunds? The main page could then be reduced to just an introduction to each. I hope this would make the Hedgefund article would be more focussed, and easier to maintain and read. Servalo 11:39, 2 November 2007 (UTC)

There is something to be said for this. At the moment I still think that the page needs some work (the regulatory section needs some work from non-US people and the intro is clearly not settled (see below)), and maybe it would be better to settle the page down a bit before splitting it because otherwise we just put the same problem onto multiple pages. I think the page is still smaller than some and not too unwieldy, though I expect that some parts have capacity for expansion in the future so if other people wanted to split it now, I would be happy enough to go with that. Art Markham 19:19, 5 November 2007 (UTC)

Intro rewrite

I've substantially rewritten what had become a highly misinforming introduction.

A couple of examples:

Reason for existence: Someone amended the first sentence to read "A hedge fund is an investment fund structured to avoid direct regulation and taxation in major host countries." This is clearly highly POV, not to mention ill-informed. Hedge funds are more accurately and financially-informing when labeled as absolute return funds. They exist to make money regardless of market conditions. Being "structured to avoid direct regulation and taxation" does not in and of itself make money, and that's obvious on the face of it.

Secrecy: The section was previously ignoring the fact that it would be illegal to release hedge funds' private information such as returns, etc. to the general public.

My intent in the rewrite is to inform. I would hope that future editors will avoid the temptation to push some sort of anti-hedge fund bias, particularly if it is ill informed.

--24.28.6.209 14:16, 3 November 2007 (UTC)

The comment regarding regaulation/taxation is not POV - either it is true that they are structured that way or it isn't, and that is how all hedge funds are structured in my experience - I have just spent 6 months as a trainee in a UK law firm doing nothing but setting up hedge funds, which doesn't make me the last word on the subject by any means but I do know what I am talking about. The freedom from regulation is how they are able to adopt the strategies that allow them to hedge in the first place, in contrast to retail funds, which do not have that freedom. I am very happy to change the emphasis of the introduction to give hedge fund investment strategies more prominence, but the way that hedge funds are structured is fundamental to everything that they do.

As I said above when I proposed the change in this discussion page before implementing it, my comments are based on my UK experience, so if hedge funds are directly regulated and directly taxed in other jurisdictions then please say so and we can find wording that encompasses the full range of hedge funds.

The revert to references to accredited investors etc is a) country-specific and b) technical wording that would not be understood by a layman, so is a retrograde step - we should be trying to get rid of that kind of material from the introduction. It should definitely be covered in the regulatory section, but not in the introduction.

Secrecy - it wasn't so much a question of "ignoring" that point as simply not stating it, but I'm happy for that point to go in.

Finally, I don't agree that all hedge funds are "absolute return" any more, but I think you clearly subscribe to the narrower and more literal definition rather than the common usage of the term - I tend to follow the latter, just because that is what everyone I know in hedge funds does. The disparity is one that should be noted in the text, but words like "overused" and "inappopriately" are your POV, and shouldn't be there.

I'll wait for your reply before we start changing things. Art Markham 19:10, 5 November 2007 (UTC)

See latest edits and citation. --71.42.142.238 17:54, 13 November 2007 (UTC)

I agree that the former wording was somewhat POV in that indicated that avoiding regulation was the intent of creating the fund. That is not necessarily the case. However have removed "absolute return" as that is not part of the generally accepted definition. See, e.g., http://www.sec.gov/answers/hedge.htm --Samiharris 13:59, 15 November 2007 (UTC)

24.28.6.209, I don't think all the changes you made are really neccessary. "structured to avoid direct regulation and taxation" doesn't strike me as at all contentious -- any HF lawyer or any HF manager I know would agree -- so I think it should be there. I also don't like defining HFs in terms of "absolute return", which is a much younger term and is also ill-defined.

Good point on secrecy though, I think people often assume HF secrecy is suspicious when most of it just arises from the (enforced) lack of a sales operation.

Perhaps it would make discussion more convenient if you set up a user name? -- Servalo (talk) 17:50, 16 November 2007 (UTC)

Comparing the two versions, in the main I tend to prefer Art's. How do the rest of you see it? I'll leave it a few days and then have a go at producing something that sits in between the two. -- Servalo (talk) 18:09, 16 November 2007 (UTC)

It would probably be worth noting as well that hedge fund managers are compensated as a function of the fund's return. In other words, they are given an incentive to see the fund/members make money. This is a unique identifier of what we have come to call a "hedge fund" these days.

In point of fact: In the U.S., it is in fact illegal for a stock broker, for example, to be given any incentive compensation as a function of the total return on his clients' assets. It'd likely also be good to point out as to 'why' this is the case (answer: that's how the major stock brokerage houses want it to stay, as it helps to ensure that top-performing brokers can't run away with 'their' clients).

I agree with Samiharris that it is POV to assert that the intention for creating a hedge fund is to avoid regulation. That's a secondary, peripheral thing...not the driving force with regard to intention. Moreover, given the U.S. stock broker example above, regulation itself ought to be questioned, as it clearly isn't always designed to look out for the common man's best interests. IMHO, grownups ought to be allowed to invest wherever they damn well please; the idea that the government is "here to help" just doesn't always hold water. ---- 71.42.142.238 (talk) 20:44, 16 November 2007 (UTC)