MAST: FAQs about Hedge Funds (Resource)

FAQs

Frequently Asked Questions

Some of the more common queries we have received in the past may assist you in obtaining more information about Hedge Funds or in deciding if alternative investments are appropriate for your portfolio. If you don't see the answer to your query please use our feedback form to let us know and we will try to get you an answer. You may also email us at

How to Start and Manage a Hedge Fund

General Information is available in our MAST Information.

$       What is a Hedge Fund?
$       Who can Invest?
$       Why should I Invest?
$       Compare with Mutual Funds!
$       Are my Assets Safe?
$       Are my Assets Insured?
$       What about Liquidity?
$       What % of my Portfolio?
$       How do I become a Partner?
$       Who tracks Performance?
$       Who are the Managers?
$       Where can I get more info?
$       Other Questions?

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What is a Hedge Fund ?

Hedge Funds are alternative investment vehicles, unregulated under the Securities Act of 1933-34 and generally available to High Net Worth Individuals and Asset Management Institutions. They usually have little or no market liquidity, and may follow various investment techniques which may or may not actually "hedge."

Please see our detailed description.

Who can Invest ?

Please see the Accredited section for detailed information. While traditionally these Alternative Investments, including Hedge Funds have always been afforded to the High Net Worth Individual and Money Management Institutions, lately this style of investing has become more mainstream. The barriers to entry have always been high ($100K -250K minimums with lock in periods sometimes more than 3 Years), MAST Partners can recommend a more affordable, more focused (read less waste) solution for accredited investors.

As with all investments- it is not the Category, Sector or Style that is important but the individual Investment itself. It is more important to choose the Placement than it is to time the market or be in the "right" sector at the "right time."

OffShore Investors should contact us for special information or visit the OffShore investments page.

Why should I Invest ?

Select Alternative Investments like Hedge Funds may provide the appropriate amount of Diversification, Risk Management, Down-side Protection, Capital Preservation, Capital Appreciation and sometimes, downright obscene market-beating returns for your portfolio.

Again, this is not a standard concept. There is no magic-silver-bullet formula. So choosing your Investment Partners well is very important. Though select Hedge Funds have been the SECRET of savvy, High Net Worth individuals, more and more main-stream investors are recognizing their value now more so than the Wall Street Professionals of late.

Lastly, as the old adage goes: If you have to ask, maybe its not yet time for you!.

Compare with Mutual Funds ?

For similarities and differences, please see HERE for more information.

Assets: Safe ? Insured ... ?

The focus of most investors' (freshmen and seasoned) thoughts: Is it possible to get Diversification, High Returns from safe insured investments?

In a word NO! Not every time. Not all the time.

Insured Investments - Where one CANNOT generally lose money (like Treasury Bills, Bank Savings Accounts, etc.) have historically never provided long-term returns like speculative investments.

By the way, as most people know: Mutual Funds are not insured either- in fact, even that money fund at your brokerage account, while relatively stable, is NOT INSURED!

Liquidity of Funds ?

Most Alternative Investments have some Lock-In period to prevent destabilization of investments.

See Minimum Lock-In Period.

What % of Portfolio should ... ?

Consult with your Financial Advisor, Tax Professional, Accountant, and/or Attorney.

Dependencies (variables) include Liquidity, Need for Immediate Funds, Investment Horizon, Age, Family, Lifestyle, Current Geographical Home, Planned Geographical Home, Future Bulk Expenses, Liquid Net Worth.

With these considerations in mind, despite the lack of consensus amongst Advisors, some believe one should generally have no more than 40% of their Liquid Assets in Alternative Investments, with the more conservative clients investing between 10% and 25%.

A careful choice of all one's investment vehicles is ALWAYS more important than simply allocating percentages of the entire portfolio.

Please note this does NOT constitute advice and it always prudent to consult financial professionals prior to any investment.

How do I become a Partner ?

Subscribing to Limited Partnership Interests is not appropriate for everyone. Please check with your Financial Advisor, Tax Professional, Accountant, etc. prior to investing. Please remember that liquidity in any private placement is (by definition) comparatively severely limited. Thus at any given time a sale of such interests may not be possible.

Please note that these investments are PRIVATE PLACEMENTs. What that means is that they are not automatically available to everyone. While one may have the financial resources, one may, possibly be ineligible to subscribe to any interests.

Private Placement Investment Interests can only be subscribed to by a Confidential Offering Memorandum and Partnership Agreement which has to be executed by the Investor and the General Partner. In accordance with federal and state laws, this does not constitute an advertisement or promotion of any such placement. Any part of this web site or web page must NOT be construed as such.

Details on how to invest in a hedge fund or subscribe to interests in ANY private placement are listed here. Contact us by email

OffShore Investors should contact us for special information or visit the OffShore investment page.

Who tracks Performance ?

All performance is generally tracked by the management of the partnership. While fraud in such areas is relatively uncommon, it is far from impossible. Most Alternative Investment Managers keep the details of their portfolios confidential. This could constitute a risk for the limited partners.

There are a few organizations that track Hedge Fund performance (see our Links Page), however it should be noted that this is a voluntary reporting service from the fund managers and is generally unverified by any regulatory agency.

Most Hedge Funds do provide a compiled annual independently audited report to its Limited Partners.

Who are the Fund Managers ?

Fund Managers can be anyone!

There are no qualifications required, since these Alternative Investments are not regulated. Not so surprisingly, perhaps, there is very little rogue/fraudulent behavior in this elite community. However things may change, as in recent years, 2004-2007, the SEC has been contemplating changing the rules and regulating this multi-trillion dollar industry. It has started with the idea of a voluntary registration, specifically of funds with assets over $25MM.

The fund managers get a part of the profits and therefore (unlike Mutual Fund Managers and Brokerage Industry Professionals) have a directly proportional relationship with increasing your investment value. Usually they receive a paltry annual administrative fee (1%-2% or so- thus a Manager with a 10 MILLION Dollars in assets makes $100,000 - $200,000 a year in fees- gross, and that is usually for paying out essential expenses, subscriptions, fees, administrative costs, payroll, rent/lease, etc. - hardly enough for a Grand Lifestyle!!). Most managers look to receiving a percentage of the profits (increase in your account's cost basis) annually for compensation. Of course this means that for them to make any (serious) money, you have to make it first. To put it another way: the more money you make the more they make! Again - unlike most Mutual Fund Managers out there today!!

Where can I get more Info ?

More information is available at this site in the About MAST ... section as well as in the H/F Overview section. You may also obtain information directly from MASTPartners.com by contacting us, or emailing us at . Also we have a HELP section which may be of assistance.