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For additional information, download MFA’s Hedge Fund Due Diligence.
Resources:
• Research individual fun...
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Hedge Fund Due Diligence Infographic

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Similar to the recent Hedge Fund Due Diligence presentation, this infographic gives readers a visual representation of some important questions to consider when investigating a hedge fund investment.

Coming on the heels of the Securities and Exchange Commission’s approval of rules related to the Jumpstart Our Business Startups (JOBS) Act, the educational infographic shows a step-by-step process to evaluate an investor’s ability to invest in hedge funds. Suggested resources, such as MFA’s Hedge Fund Due Diligence Questionnaire and other resources provided by the SEC, are included for reference.

If investors are not able to participate in hedge funds because they do not meet substantial tests of net worth or income, they still may benefit from hedge fund investments – through public or private pension plans, university endowments, or philanthropic foundations. In fact, 65% of global hedge fund assets are held by institutional investors.

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Hedge Fund Due Diligence Infographic

  1. 1. managedfunds.org For additional information, download MFA’s Hedge Fund Due Diligence. Resources: • Research individual funds and managers through the SEC’s Investment Adviser Public Disclosure page. • Research smaller funds and managers through state securities regulators – as provided by the North American Securities Administrators Association (NASAA). • The SEC’s definition of accredited investor. • The SEC’s Investing Basics website. Want to know more? MFA has created a due-diligence questionnaire for investors. In practice, all hedge funds should provide you with a private placement memorandum for you to carefully review before you invest. But you may benefit from hedge fund investments through: • Public and corporate pension plans • University endowments • Philanthropic foundations * 65 percent of global hedge fund assets are held by institutional investors. Source: Preqin 2012 What should I be cautious about before I invest in a hedge fund? • Understand the investment strategy and risk profile of the fund before you invest • Learn more about a fund manager’s background, including any disciplinary record, on the SEC’s Investment Adviser Public Disclosure website • Learn about advisers managing less than $100 million in assets through the state securities commission in the state they are located (instead of the SEC) • Review legal documents with your lawyer and / or accountant What are some red flags I should be mindful of? The manager is applying pressure to make an investment immediately: • Applying pressure or claiming that the opportunity is limited may be a sign that something is amiss The manager guarantees a high return • No one can or should guarantee a return of any kind Use extra caution if an adviser is not registered with the SEC or state securities commission It is unlikely you may invest in an advertised hedge fund.* * At a minimum, you must be an accredited investor to invest in an advertised hedge fund. NO You may be permitted to invest in an advertised hedge fund. YES Do you meet substantial tests of net worth or income?* *For a complete definition of accredited investor, qualified client, and qualified purchaser, visit the Securities and Exchange Commission’s (SEC) website I saw an advertisement for a hedge fund. MAY I INVEST?

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