Have you seen all those big full page ads for hedge funds in the Wall Street Journal, the Financial Times, Investors Business Daily? You haven't. Maybe they are being drowned out by the regular mutual funds who continually tell you how great they are.
Shucks! I forgot. Hedge funds are not allowed to advertise. I wonder why. Maybe they think that their potential customers are too dumb to know that hedge funds are a poor investment. Could be. The Securities and Exchange Commission is trying to protect investors ? I think?
To be able to buy into a hedge fund the smallest investor must have a net worth of $1,000,000 and an income of more than $200,000 per year. Maybe the SEC doesn't think these folks are bright enough to know a good thing when they see it.
There are other groups that are major investors with the hedge funds. Literally billions of dollars are invested by university endowments, charitable trusts, state and corporate pension plans. Could it be that they have a better return than regular mutual funds? Naw! The media would tell you wouldn't they?
The media is there to report the facts. It is hard to believe that just because a large portion of their income is from advertising revenues of mutual funds that they would be lax about this.
If you were a fund manager and your fund was under performing and it was reported in the local paper, TV, or radio would you pay them to carry your advertising? You sure would not want to be compared with performance of a hedge fund.
What is it that makes the difference of a standard mutual fund with a hedge fund? Why does the smart money gravitate to them? One word. Performance. A regular hedge fund manager is paid on HOW MUCH money he has in his fund and not on how much he makes for the investor. The hedge fund manager is paid a percentage of the PROFITS he makes for the investors. No profit means no bonus so he better do the job or he will be out of a job. Smart money moves. It moves to where the profit is being made.
The SEC will not allow standard mutual fund managers to be compensated in this manner. Their claim is that it will be too dangerous for the small investor. Hog wash! If a fund is losing money the little guy should be selling his current funds like the smart money and finding a better performing fund. None of the media recommend this to the little guy.
My guess is there are enough intelligent fund managers who would like to be paid for performance and would set up no-load funds to attract investors. The SEC seems to think more of the funds than they do of the smaller investors.
It is a shame you can't check the advertising claims of standard mutual funds against the returns of hedge funds.
Copyright 2005
Al Thomas' book, "If It Doesn't Go Up, Don't Buy It!" has helped thousands of people make money and keep their profits with his simple 2-step method. Read the first chapter at http://www.mutualfundmagic.com and discover why he's the man that Wall Street does not want you to know.
Copyright 2005
no-contract cleaning service Mundelein ..Before you embark upon a journey of trading stocks or... Read More
Suppose your position has made a big move and you... Read More
Are you one of those many people who dread reading... Read More
If you want one.And I don't recommend any broker with... Read More
1. Do not spread your money too thin.My friend has... Read More
This is a rather simple strategy with which I am... Read More
(1) Stock Market is Tough Place to Make Any Money... Read More
A common problem I often see when working with living... Read More
Ever have one of those sample boxes of candy? Each... Read More
The single most expensive stock market trades are those made... Read More
If there is one term over-used when talking about making... Read More
One of the basic laws of physics is that a... Read More
Using Swing Trading Strategies and Technical Analysis when Trading Stocks... Read More
Outlined below are some of the advantages and disadvantages of... Read More
The demand for world oil is increasing while world reserves... Read More
Every day I see in the financial section of newspapers... Read More
All stock trading and investing methods must deal with the... Read More
The stock market has not been very kind to your... Read More
The spring-loaded rat catcher is the ultimate low-tech device invented... Read More
When we go to the circus we see a trapeze... Read More
It looks like the market is ready to start up... Read More
As an investor you will want to check out any... Read More
The basis of diminishing return discussions surround such simple notions;... Read More
Have you bought any mutual funds this year or late... Read More
Financial markets provide their participants with the most favorable conditions... Read More
maid service near Glenview ..The recent criminal fiasco in the mutual fund industry is... Read More
Everything you invest in has risk so you want to... Read More
There are formulas for just about everything, but it has... Read More
Ever turn down a street, get half way and suddenly... Read More
How often have you come across an advertisement or e-mail... Read More
One Saturday morning, while he was sitting at his computer... Read More
The gleam and bright lights of Wall Street lure in... Read More
How many people went to a cash position this week?... Read More
I go to the Money Show every year to visit... Read More
Let's discuss commodities; with the latest Enron situation, it is... Read More
Picking a beaten-down stock requires a different kind of selection... Read More
Today we are inundated with tons of information about the... Read More
It seems that every day I turn on the TV... Read More
An insane person cannot evaluate an insane evaluation system.As you... Read More
Caught in a whirlpool and being sucked under. No life... Read More
You have a lock on your house. You have a... Read More
Why? Because I am going to shatter your conventional wisdom... Read More
In a previously written article, we expanded the use of... Read More
As GuruFocus updates the stock buys and sells of gurus,... Read More
There is so much involved in developing peak performance, that... Read More
Reach in your pocket and take out that big roll... Read More
If it walks like a duck, quacks like a duck... Read More
Stocks breakout from properly formed bases everyday but many investors... Read More
Are hedge funds a suitable investment for you? Hedge funds... Read More
It is wonderful to be alive in the information age.... Read More
Stocks & Mutual Fund |