Hedge Funds

You read and hear a lot about hedge funds. Unfortunately, most of what you hear is negative because it comes from the major media that has an interest in reporting negatives about them because the major media is supported by so-called standard mutual funds and brokerage companies that spend big bucks for advertising. Hedge funds are NOT allowed to advertise.

First of all a hedge fund is almost identical to a mutual fund. There have actually been fewer fraud complaints about hedge funds than about mutual funds. That doesn't mean they don't lose money just as regular mutual funds do.

The underperformance of mutual funds is not highlighted in the press; you don't bite the hand that feeds you. I'm talking about advertising revenues. Would Janus, Invesco, Vanguard or any big fund family continue to place advertising dollars with someone who told stories about their losing funds or recommended that investors sell them to find a better performer? Hardly.

Mutual funds use customers' money to buy stock and bonds. Hedge funds are not limited to what they can buy. The can buy or short sell derivatives, commodities, options, oil and gas leases, freight rates and even take an investor's money to the race track (although I doubt if they would). The managers of these funds are specialists in their field of knowledge and many do extremely well. Just because they are different doesn't make them bad. Like all investments you must know where your money is going and how it is going to be invested.

The one major difference is how the fund manager is paid. Regular mutual fund managers are paid on how much money they manage and NOT on performance. Hedge fund managers usually receive 1% of the fund assets that goes for expenses and 20% of the profits they make for their investors. In other words if they don't make a profit for you they don't get paid. I sure would like to see them do that in regular mutual funds, but the Securities and Exchange Commission is the captive of the mutual fund industry so don't hold your breath. The true ability of fund managers would be exposed and many funds would disappear as the smart investors would be transferring their money to fund managers who have winning records every year. Yes, every year. No more of the nonsense of how they beat the S&P500 by 5% yet lost your money.

So many of the hedge fund articles say the investors are being hood winked into putting money into these funds. I don't think so. Almost every big state and corporate pension plan, university endowment, charitable trust and other large financial plans have money in hedge funds. Like any cautious investor they did their due diligence to find out the track record and management capabilities of the hedge fund.

You have to be rich to put money into a hedge fund. They require an income of $200,000 per year and assets of one million or more. Many require large initial investments.

If you qualify they are definitely a better place than a regular mutual fund, but you must do your due diligence.

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

In The News:

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Under pressure to perform well, MFs bought & sold these stocks in December quarter  Economic TimesMFs increased their stake by more than 1 per cent in at least 41 stocks.
Fund managers' picks: Large, mid & smallcap stocks that MFs bought, sold in Dec  Moneycontrol.comMF assets declined to Rs 22.8 lakh crore in December 2018 from Rs 23.4 lakh core in Nov 2018 on the back of moderation in the flows in equity funds and ...
Mutual funds may need smart bets on smallcap stocks to beat ETF show  Economic TimesSmallcap stocks could see up to ₹1 lakh cr inflow as fund managers look for potential winners: Analysts.
Hot and Cold Stocks of Mutual Funds in November 2018  MoneylifeIn November 2018, Axis Bank and ICICI Bank were the most preferred stocks of Indian mutual funds.
Money with Monika Season 2, Episode 2: Mutual funds versus direct stocks  LivemintIn this episode of Money With Monika, personal finance expert Monika Halan talks about the benefits of choosing a mutual fund over direct stock investments.
Remembering Jack Bogle, colossus of mutual fund industry  LivemintVanguard founder Jack Bogle turned the mutual fund industry on its head more than 30 years ago by thinking of and acting in the interest of the retail investor.
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Sebi issues norms for mutual funds investments in derivatives  Moneycontrol.comCurrently, mutual fund schemes are permitted to undertake transactions in equity derivatives but cannot write options or purchase instruments with embedded ...
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When Rules of Thumb Fail  Morningstar.comFaulty Exits Tuesday's column discussed a research paper, “Selling Fast and Buying Slow: Heuristics and Trading Performance of Institutional Investors,” that ...
Sebi brings cybersecurity framework for mutual funds and AMCs  Economic TimesNEW DELHI: Markets regulator Sebi Thursday put in place a robust and stricter cybersecurity framework for mutual funds and asset management companies ...
4 Small-Cap Growth Mutual Funds for 2019  Zacks.comSmall-cap funds that offer good earnings potential could be your best bet amid economic tailwinds and growth projections.
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China Trade News Lifts Stocks: Netflix, AmEx, Tesla Lag  Investor's Business DailyHints of China trade progress sent U.S. stocks and global markets higher Friday, but Netflix and Tesla posted heavy losses, hampering early gains.
Sick of Your Oil Stocks Getting Slaughtered? Try This Instead  The Motley Fool CanadaPicking individual stocks in the oil sector has been devastating for many investors. Choose an ETF like BMO Equal Weight Oil Gas Index ETF (TSX:ZEO) instead.
The Zerodha story: How the Kamath brothers built India's largest retail broker  Moneycontrol.comZerodha started its journey in 2010 with a team of five people. Today, it employs over 1300 people.
Adding Insult To Injury, Investors Dump U.S. Stocks And Buy China  ForbesMoney is flowing out of U.S. stocks and bonds. China, on the other hand, is seeing billions flowing back into its equity market.
Atlassian Stock Reverses Lower Despite Earnings, Revenue Topping Views  Investor's Business DailyAtlassian (TEAM) on Thursday reported fiscal second-quarter profit and revenue that topped expectations and issued mainly in-line guidance for the current ...
Stock market: 19 stocks to buy next year  USA TODAYWhat stocks should you buy next year? Here's a list of 19 stocks mutual fund managers say are "buys" in 2019.
Take Buffett’s Advice: 5 Vanguard Funds to Buy  Investorplace.comWarren Buffett believes index funds are the way to go for most investors, making these five 'products' from Vanguard Funds worth owning.
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Mutual funds bet big on these 30 stocks in November; do you own any?  Moneycontrol.comMF industry assets grew to Rs 23.4 lakh crore, on the back of improved inflows into liquid funds and steady equity markets.
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Stock Watch: Investors Focusing on Shares of Maxwell Technologies, Inc. (NASDAQ:MXWL) as Company Makes Headlines With Moves  The Coin GuildMajor market players are buzzing over Maxwell Technologies, Inc. (NASDAQ:MXWL) as their share price hit $2.33 at the end of the most recent trading session.
Stock Focus: Investors Keen on Magellan Petroleum Corporation (:TELL) as it Makes Waves With Moves  The Coin GuildMajor market players are buzzing over Magellan Petroleum Corporation (:TELL) as their share price hit $7.86 at the end of the most recent trading session.
Stock Focus: Investors Keen on Windstream Holdings, Inc. (NASDAQ:WIN) as it Makes Waves With Moves  The Coin GuildMajor market players are buzzing over Windstream Holdings, Inc. (NASDAQ:WIN) as their share price hit $3.05 at the end of the most recent trading session.
Fund managers ready to go shopping after sharp correction in stocks  Moneycontrol.comMutual funds that were holding around 8-10 percent cash level in their equity portfolio are likely to purchase shares of companies in banking and financial ...
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Why stopping mutual fund SIPs when stock market falls can jeopardise your financial goals  Economic TimesFear has returned to Dalal Street. Caught in a perfect storm of weak macroeconomic numbers, the IL&FS crisis and fear of more defaults, equity markets have ...
Mutual funds' exposure to banks hits 3-month low of Rs 1.88 lakh crore in Sept  Economic TimesMutual funds' holding of banking stocks declined by over Rs 21,600 crore to Rs 1.88 lakh crore in September, driven by the correction in equity markets.
Check out what top five mutual funds bought & sold during October selloff  Economic TimesNEW DELHI: Mutual funds stood resilient as industry's asset base increased to Rs 22.23 lakh crore in October in spite of a heavy correction in the domestic ...
Mutual funds that destroyed most investor wealth in the September selloff  Economic TimesThe recent selloff in the stock market has raised fears of a rush for redemption in mutual funds.​
Five stocks that mutual funds think can outperform  Economic TimesA volatile month gave fund managers a chance to cherry-pick stocks.
Shall I buy the HDFC AMC stock or mutual fund?  LivemintThe HDFC Asset Management Co. Ltd stock closed 65% up on the first day of listing over its IPO price of ₹1,100 per share. Investors who sold on day one, saw ...
When should you sell your mutual fund schemes? - Stocks and equity mutual funds are different  Economic TimesInvesting in an individual stock and equity mutual fund scheme is different. You must look at various parameters like key ratios while investing in a stock. Hence ...
Value focussed MF are cutting their exposure to Indian stocks. What about you?  Moneycontrol.comAs valuations climb, the funds have chosen to stay light on Indian stocks and exposure to bonds and arbitrage has gone up.
New stock ideas boost equity mutual fund portfolios  LivemintIt is imperative for mutual fund houses to beef up their research capabilities, to be able to identify more winning new ideas.
How stocks picked by mutual funds over 2014 to 2017 have performed  Economic TimesWhile the most wanted stocks of 2014 and 2015 have done well, the recent picks have disappointed.
Investing in equity mutual funds versus investing in shares: Which is better?  Economic TimesBy Dhirendra Kumar Hopefully, by now my columns have convinced you that most of your long-term investments should be in equity. The next question to be ...
Are mid and small-cap mutual funds holding too many illiquid stocks?  Economic TimesLiquidity has been scarce in Indian capital markets in recent weeks. Mutual funds have also not been spared the pain, with liquid and money market funds ...
Why your mutual fund earned you less than Nifty in recent market rally  Economic TimesThe more the number of stocks in an index, the weaker is its performance.
How your mutual funds played the balancing act during stocks crash  Economic TimesBy Bhavana Acharya The last three months has been a bumpy ride for largecap stocks. The year so far has been unkind to the midcap and smallcap set.
Small- and mid-cap mutual funds open doors again, but should you invest?  LivemintL&T Emerging Businesses Fund and DSP Small Cap Fund have allowed *fresh* mutual fund investments, taking advantage of a continued correction in small- ...
Picking the best mutual fund: Are past returns relevant after re-categorisation?  Moneycontrol.comWhile selecting a scheme for investment or while deciding whether to continue with a current investment, a fund's performance track record does play a critical ...
Best mutual funds to invest in India  Times of IndiaFAQs News: Market analyst says that it would be difficult for investors to get high returns in 2018 pointing to the volatility faced by the stock market. The inv.
Mutual fund holdings in IT stocks touch all-time high  Economic TimesMumbai: Fund managers are betting big on the IT sector, on the back of an improving global macro environment, depreciating rupee and rise in IT spends.
Is it a good time to invest in small-cap mutual fund schemes?  Economic TimesDespite the slide in the Nifty Smallcap100 index, fund houses seem to be placing faith in small-cap funds again. Should investors take the cue?
5 strategies for investing in mutual fund in the current market to get good returns  Moneycontrol.comMutual fund investing is all about ascertaining your goals and setting out to reach them.
These 18 consistent mutual funds may help you to beat stock market volatility  Economic TimesMany equity mutual fund advisors abhor volatility in the stock market. They are always searching for ways to tackle this beast which gives them sleepless nights.
Why HDFC Bank stock is among the top picks of mutual funds  Business TodayPrivate sector lender HDFC Bank, the third-largest Indian firm by market capitalisation, is among the favourite stocks in the portfolios of mutual funds. Despite ...
List of best mutual fund portfolios as per your risk appetite  Moneycontrol.comYou can build a portfolio of mutual fund schemes based on your risk profile.
Do not make these 7 mistakes while investing in mutual funds  Moneycontrol.comNever forget that you are investing because you have to achieve your financial goals. Investing without a goal is akin to travelling without a destination.
Top stocks bought and sold by mutual funds in June 2018  IndiainfolineInvestors should focus on longevity to create wealth. We advise investors to stay invested in those stocks whose growth story is still intact.
Mutual Funds For First Time Manage More Money In Stocks Than Insurers  BloombergQuintMutual funds for the first time manage more money in equities than insurers as the last stock rout erased the gap that started narrowing after demonetisation.
Some international funds are giving around 40% returns. Should you invest?  Economic TimesInternational mutual funds are topping the return charts. The category has returned around 20 per cent in one year. Should retail investors bet on these schemes ...
Investing in stocks needs deep understanding of markets  LivemintDirect investing into individual stocks requires deep understanding of the markets and continuous involvement into investing.
How to Invest in Mutual Funds  The Motley FoolIf you want to understand how to pick the right mutual fund for you, you've come to the right place. In the guide below, I've put together all the major pieces of ...
Fund managers' bets: Top 10 large, mid and small-cap stocks that MFs bought in October  Moneycontrol.comMF industry assets grew to Rs 22.2 lakh crore on the back of improved inflows into equity-oriented and liquid funds.
How to build your mutual fund portfolio from scratch  Moneycontrol.comYou need to know that there is no such thing as a "perfect mutual fund portfolio". There can be numerous reasonably good portfolios, and there's no ...
Mutual fund managers bought & sold these 20 stocks in May  Moneycontrol.comRelative valuations are attractive and around average, but midcap valuations are still looking stretched despite the recent drawdown, Morgan Stanley said in a ...
Bleeding mutual funds: Should you go back to good old fixed deposits?  Moneycontrol.comAre you worried about the losses on your investments in mutual fund schemes? You are not alone. There are many investors who dumped their good old fixed ...
Top 10 large, mid and smallcap stocks which fund managers bought & sold in September  Moneycontrol.comFears of a liquidity crunch following the IL&FS crisis hit the mutual fund industry in September. Cash plans, or liquid funds, were the worst hit.
HDFC AMC, Reliance Nippon stocks fall over 9% after Sebi caps expense ratio of mutual funds  Business TodayThe stocks of asset management companies (AMCs) fell in trade today on fears of lower revenues after market regulator Sebi capped expense ratio for mutual ...
How much do mutual fund managers invest in their own schemes?  Moneycontrol.comEver since SEBI mandated mutual fund houses to disclose how much fund managers, directors of the asset management company and other key employees ...
How diversified should a mutual fund be?  LivemintThe extent of diversification is driven by the mutual fund's strategy and the market segment it invests in.
Should you shift from large-cap mutual funds to index funds?  Economic TimesThe index fund category of mutual fund schemes is slowly gaining traction among investors. The fortunes of index funds are changing as not only are they being ...
Benefits of asset allocation in mutual funds  Economic TimesWith macros looking weak and stock market indices at a new high, financial planners believe it is important for investors to follow the principle of asset allocation.
Top 10 wealth creator mutual fund schemes of 2018  Moneycontrol.comThe IT sector has been riding on good earnings show by the IT giants in India. The depreciating rupee is in the last few years boosted the fortunes of the ...
Top 10 mutual funds which can double your wealth in long term  The Financial ExpressMutual funds are one of the most popular and smart ways for investors to build wealth over the long term. One can also double one's money, if planned properly.
Mutual Funds Four Strategies For Managing A Portfolio Of Mutual Funds  InvestopediaNow that you've built your portfolio of mutual funds, you need to know how to maintain it. Let's talk about how to manage a mutual-fund portfolio by reviewing four ...
These 10 stocks make up over one-third of entire mutual fund portfolio in India; check full list  The Financial ExpressEven as Sensex and Nifty continue their strong rally driven by a cheer in blue chip stocks, just 10 top names make up a whopping 34% of the entire mutual fund ...
Sebi may tighten liquid MF rules  Economic TimesBy Pavan Burugula & Reena Zachariah The Securities and Exchange Board of India (Sebi) is considering a proposal to tighten rules for liquid mutual funds ...
Look which mutual fund categories shone & which ones faded in 2018  Economic TimesTechnology as a category stood out as the only oasis for mutual fund investors this calendar, as it managed to deliver double-digit returns to investors over the ...
Mutual Fund Investment: Should you invest in MFs when the stock market is down?  The Financial ExpressIn a situation where the stock market is down, you can actually give yourself a 'smart investor' tag by buying more units of mutual funds to benefit out of the crash.
Choose your mobile app wisely to invest in direct mutual funds  Moneycontrol.comSome mobile apps are not updated on regular basis. Often there may be errors in the stocks portfolio of several schemes.
What Is a Mutual Fund? Pros, Cons, Types and How to Invest  TheStreet.comKeep hearing about mutual funds but don't really know what they are? No sweat! TheStreet breaks down what a mutual fund is, the different kinds, and how to ...
10 mutual fund options that could be good bets as markets trend higher  Moneycontrol.comInvestment advisors feel this is time for caution and that investors should veer more towards funds with exposure towards large-caps or those that are multi-cap ...

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