Frequently Asked Questions: Some common queries that 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 contact us via Email.
General Information is available in our About Us section.
ContentsON THIS PAGE:
- What is a Hedge Fund?
- Who can Invest?
- Why should I Invest?
- Compare with Mutual Funds!
- What about Liquidity?
- Are my Assets Safe?
- Are my Assets Insured?
- What % of my Portfolio?
- How do I become an Investor?
- Who tracks Performance?
- Who are the Managers?
- Where can I get more info?
What is a Hedge Fund ?
Hedge Funds are alternative investment vehicles, unregulated under the Securities Act of 1933-34 and generally available only to High Net Worth Individuals (Accredited Investors) 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: What is a Hedge Fund?
Contact us via Email.
Who can Invest ?
Please see the participation section for detailed information. While traditionally these Alternative Investments, including Hedge Funds have always been afforded to the High Net Worth Individual (Accredited Investor) and Money Management Institutions, lately this style of investing has become more mainstream. The barriers to entry have always been high ($250K - $1MM minimums with lock in periods sometimes three or more 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.
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.
Last but not least, as the old adage goes: If you have to ask, maybe it's not yet time!
Vs. M/Fs & Liquidity
For similarities and differences between Hedge Funds and Mutual Funds, please see the HF vs MF comparison.
Liquidity: Most Alternative Investments have some Lock-In period to prevent destabilization of investments.
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 market instrument at your bank or brokerage account, while relatively stable, is NOT INSURED!
What % of Portfolio…?
What percentage of a portfolio should typically
be represented by alternative assets?
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; It is always prudent to consult with financial professionals prior to any investment.
Become a Investor?
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 website 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 available in the HF Info section. Contact us via Email.
OffShore Investors should contact us for specific information.
All performance is generally tracked by the management of the partnership. While fraud in such areas is relatively uncommon, it is far from impossible- Lake Shore, Bernie Madoff, A&O, Bayou Capital, etc., come to mind. 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, 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 (sometime even quarterly,) independently audited report to its Limited Partners.
Who can be a Manager?
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, the SEC has been involved in a myriad new and updated rules 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 or management company with a Million Dollars in assets ONLY makes $10,000 - $20,000 a year in fees- gross. With $10MM the fees max out at $200K for the entire company, and that is BEFORE paying for essential operational 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!!
Need More Info on …?
More information is available at MASTPartners.com as well as in the H/F Overview section. You may also obtain information directly by sending us a request for information online, or via Email. Also the HELP section may be of assistance. The SEC has some basic information.