hedge fund investors in it,” he says.
But the best way to find a hedge fund or fund of funds is through high-net-worth advisers who have access to hedge fund experts and research. Take note: Some advisers know their way around the hedge fund world more than others, and some won’t touch hedge funds because of liability fears.
“Because hedge funds don’t have the same transparency as mutual funds, I’m not willing to make that bet with my clients’ money and my practice,” says Stacy Francis, president of Francis Financial in New York City.
Part of the value of using advisers is that they can use their influence to pry more information from hedge fund managers than most individuals, explains England. “Because of the lack of regulatory oversight, being a self-directed investor when it comes to hedge funds can be a slippery slope.”
Die-hard do-it-yourselfers should read as much as possible about hedge funds. A good place to start is Investing in Hedge Funds by Joseph G. Nicholas (Bloomberg Press; $34.95). Also, attend hedge fund conferences if possible. There are also online resources such as www.hedgefundcenter.com, www.hedge fund.net and www.morningstar.com, which provide information about fund managers, historical performance, and fees. Note that some of the information may be accessed only by accredited investors. For complete beginners, there’s even the recently released Hedge Funds for Dummies by Ann C. Logue (Wiley Publishing Inc.; $24.99).
Access to hedge funds may become easier as the industry continues to grow. And while it may be possible to remove some of the mystery that surrounds hedge funds, their complexity and the high stakes required may ensure that their club of investors remains one of the most exclusive there is.