This book covers all the bases that an investor should consider before deciding to invest. They are too numerous to mention here, but in this 342-page primer, the author clearly explains the critical information necessary to make an informed decision as to whether a hedge fund is for you.
Hedge funds have been in the news lately, but not necessarily for their supposed out performance characteristics. Nine hedge funds (for example, Amaranth Advisors) have closed their doors in the past year, some because of outsized bets by traders on the wrong side of the markets they were trading. This is not the way to increase performance. In 1998, Long-Term Capital Management blew up, even with two Noble-prize winning economists on the staff. All hedge funds are not alike and there risks that need to be taken into account.
Hedge fund assets are estimated to be $1.2 trillion with over 9000 funds in existence. For most investors, due to the stringent entry requirements, hedge funds are not an option. Wealthy individuals who may be interested in hedge funds are urged to read this book (as well as others interested in learning about the subject) before placing their hard-earned money at risk. This suggestion may save them millions of dollars in potential losses, if they decide not to invest in certain hedge funds because of their due diligence learned from this book.
Additionally, the author provides insight on setting up your own hedge fund portfolio by selecting different categories of investments. Surprisingly though, she spends a miniscule amount of time discussing exchange traded funds (ETFs) to build the hedge fund portfolio. Now that there over 425 ETFs offering all types of investment alternatives, this is one area that deserves more attention.
Overall, the author provides a credible and detailed look at the hedge fund industry. An investor needs to know the basics before committing any money to these funds. This book provides useful information to help in making the decision to invest in hedge funds.
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