Key topics from today's show
I discussed the subject "What is a Hedge Fund?" and "Why Invest in Hedge Funds?"
Hedge funds can increase portfolio diversification and provide some protection against market downturns. A hedge fund is a private pool of assets with an investment objective to generate positive returns under all market conditions. It employs a wide range of financial instruments and alternative investment strategies. The fund depends less on market direction and more on the skill of the fund manager than long-only portfolios.
I then covered the defining characteristics of a hedge fund. A hedge fund tends to display a low correlation to traditional markt indices. It has an absolute return objective with no benchmark considerations. Typically, it pays a performance-related incentive fee to the fund manager in addition to a management fee. The manager pursues a wide variety of strategies such as concentrated positions, leverage, arbitrage, and stock shorting. These strategies are not for everyone, but are the principal reason hedge funds are able to minimize their correlation to the market.
Typically hedge funds are structured as a limited partnership. Since most hedge funds are privately placed, provincial investment minimums apply. This should be discussed with an advisor. If you wish to discuss one on one, visit http://www.jeffwareham.ca/, or email me at jwareham@mgisecurities.com
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This blog has been prepared by Jeff Wareham. This opinions expressed herein are those of the writer, and not necessarily those of MGI Securities Inc. (MGI). Statistics and factual data and other information contained herein are from sources MGI believes to be reliable but their accuracy cannot be guaranteed. This information is not intended to provide specific financial, investment, tax, legal, accounting or other advice, and should not be relied upon in this regard. You should not act or rely on the information without seeking the advice of a professional. MGI is a member of the Canadian Investors Protection Fund (CIPF).
Logos of MGI are registered trademarks or trade names of MGI Securities Inc. All other trademarks appearing on any documents are the property of their respective owners.
Logos of MGI are registered trademarks or trade names of MGI Securities Inc. All other trademarks appearing on any documents are the property of their respective owners.
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