Regulators Set to Lift Ad Ban on Hedge Funds
Here's what Simon Lack (Lack sat on JPMorgan's investment committee allocating over $1 billion to hedge fund managers and founded the JPMorgan Incubator Funds, two private equity vehicles that take economic stakes in emerging hedge fund managers/. says about hedge funds in his book about hedge funds:
The dismal truth about hedge funds and how investors can get a greater share of the profits
- The surprising frequency of fraud, highlighted with several examples that the author was able to avoid through solid due diligence, industry contacts, and some luck
- Why new and emerging hedge fund managers are where generally better returns are to be found, because most capital invested is steered towards apparently safer but less profitable large, established funds rather than smaller managers that evoke the more profitable 1990s
I never did understand that "risk parity strategy" at least as it was/is practiced by Bridgewater and others it always seemed to me just a fancy term for taking a leveraged position in bonds...in other words an accident waiting to happen
Why would you want to do this:(from the article below)
"The basic idea of the strategy is that by equally distributing risks among stocks, bonds and commodities,.." ..
When finance 101 teaches the virtues of combining a mix of bonds and stocks to control the risk of a portfolio because bonds are less risky than stocks
Strategy, Using Leverage to Boost Returns, Hurt by Market Tumult
And of course there is the ongoing story of "top trader" Steve Cohen's and his hedge fund
So getting back to the new SEC policy...does anyone seriously expect small individual investors to understand the risks in "fashionable" hedge fund strategies when the largest pension fund managers and wealthiest individuals in the world failed at doing so ? In fact will the retail brokers selling these funds (which will certainly give them higher payout than traditional mutual funds) understand them and actually make sure they are "suitable" investments for their clients ?
IMO Small Investors + Hedge Funds = accident waiting to happen