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
taxi to Midway Janesville .. Lockport Chicago limo O’HareJust 30 years ago the stock market was a shadow... Read More
Do you own any mutual funds? In an IRA or... Read More
Money management starts with protecting your capital, realizing profits and... Read More
Every successful trader has a winning system. There are of... Read More
There is a current movie entitled "Eternal Sunshine of the... Read More
Even if you don't own any of their stock or... Read More
When it comes to mutual funds, there is a lot... Read More
Today's society gives special recognition to alcoholics, sexaholics, binge-aholics, shopaholics,... Read More
There can't be many traders who haven't at least considered... Read More
Have you been listening to the talking heads on CNBC-TV?... Read More
There are major differences between trading stocks and trading futures.... Read More
The greatest stock market myth is the idea that investing... Read More
Congress recently passed another new law that is supposed to... Read More
According to Investopedia Inc. the penny stock market has seen... Read More
A colleague of mine just returned from a scuba diving... Read More
Index Fund Trading can be one of the most profitable...or... Read More
I receive emails from Morningstar. This company provides statistics and... Read More
Stock trading remains a very competitive field and the stock... Read More
There are many good penny stock investments available, which could... Read More
(1) CHK stock price $16.74, NAV $32.5CHK is my favorite... Read More
Several times each month I am solicited by various market... Read More
We all know the expression, "My country, right or wrong",... Read More
Checked your 401K lately? Going back to about a year... Read More
Mutual funds and brokers are always preaching not to buy... Read More
Fundamental analysis.Fundamentals analysis says the best way to predict the... Read More
Plano taxi to Midway ..In 1960 an engineer working for a watch company in... Read More
The following are a list of nine things you want... Read More
No, this is not a symbol for some Latin number.... Read More
"If you don't know where you are going, any road... Read More
As GuruFocus updates the stock buys and sells of gurus,... Read More
As I have said many times before in this column... Read More
Because you don't feel too sure about which stock or... Read More
Ever wondered what is a mutual fund? A mutual fund... Read More
Just about everything you have been told about Social Security... Read More
For years investors have been taught to look into the... Read More
Today we are inundated with tons of information about the... Read More
Let's hope you did not have any of the Enron... Read More
A common problem I often see when working with living... Read More
Ever turn down a street, get half way and suddenly... Read More
When most analysts, financial planners, fund specialists and investors try... Read More
Reduce your investing and stock market risks by:Setting your sights... Read More
Every day in any financial publication you will find the... Read More
At some time in your life you have been on... Read More
Using Swing Trading Strategies and Technical Analysis when Trading Stocks... Read More
With over 6,000 mutual funds available, it may be tempting... Read More
Right now there doesn't seem to be any "gold fever".... Read More
Options trading can increase the profits you make when trading... Read More
Every day on CNBC-TV they show a 200-day moving average... Read More
Everything you invest in has risk so you want to... Read More
To begin, you might look at playing the stock market... Read More
Stocks & Mutual Fund |